¹ Roger Van den Bergh & Peter Camesasca, European Competition Law and Economics: A Comparative Perspective 158–59 (2001).Google Scholar

² See Directorate General for Internal Policies, Tools for ensuring the implementation and application of EU law and evaluation of their effectiveness (2013), 17, http://www.europarl.europa.eu/RegData/etudes/etudes/-join/2013/493014/IPOL-JURI_ET%282013%29493014_EN.pdf (last visited Feb. 6, 2016) (noting the alternative label “compliance deficit”).Google Scholar

³ For a discussion of (private) EU law enforcement before a court, see generally Volkert Wilman, Private Enforcement of EU Law Before National Courts. The EU Legislative Framework (2015).Google Scholar

⁴ See, e.g., the works of the European Commission for the Efficiency of Justice (CEPEJ); Art. 83(2) TFEU is all about ensuring the effectiveness of EU legislation which may justify the need for criminal enforcement.Google Scholar

⁵ The consumer protection field has recently shown some elements of public law enforcement, however, including discussions on collective redress and alternative dispute resolution as an enhancement of the prevailing private enforcement.Google Scholar

⁶ Essentially, the traditional enforcement approach is based on administrative law, but complementing it with private law enforcement is a new development.Google Scholar

⁷ See Case 26/62, Van Genden Loos v. Netherlands Inland Revenue Administration, EU:C:1963:1; 1 C.M.L.R. (1970).Google Scholar

⁸ See generally Wilman, supra note 3, at 394 (discussing the EU's involvement in enforcement).Google Scholar

⁹ See Fabrizio Cafaggi & Hans-W. Micklitz, New Frontiers of Consumer Protection: The Interplay Between Private and Public Enforcement 401, 404 (Fabrizio Cafaggi & Hans-W. Micklitz eds., 2009).Google Scholar

¹⁰ See Directorate General for Internal Policies (2013).Google Scholar

¹¹ Case C-176/03, Comm'n v. Council, 2005 E.C.R. 542, para. 48.Google Scholar

¹² See Faure, Michael, The Continental Story of Environmental Criminal Law in Europe after 23 October 2007, 17 Eur. Energy & Envtl. L. 68–75 (2008).Google Scholar

¹³ The clear factual evidence should relate to the nature or effects of the crime and to a diverging legal situation in all MS, which could be problematic for the effective enforcement of an EU Policy subject to enforcement. These proofs preferably should be statistical data allowing assessment of the factual situation.Google Scholar

¹⁴ The Institutions must establish a test of whether criminal law measures are “essential” to achieve the goal of an effective policy implementation. It implies that the legislatures need to analyze whether measures other than criminal law measures could not sufficiently ensure the policy implementation and whether criminal law could address the problem more effectively. See Communication From the Commission to the European Parliament, The Council, The European and Social Committee and the Committee of the Regions, at 7, COM (2011) 573 final (Sept. 20, 2011). Moreover, the condition of necessity applies to the level of deciding which criminal law measures to include in a particular legislative instrument. Art. 49 of the Charter of Fundamental Rights “the severity of the penalty must not be disproportionate to the criminal offence” applies here; Communication From the Commission to the European Parliament, The Council, The European and Social Committee and the Committee of the Regions, at 8, COM (2011) 573 final (Sept. 20, 2011). See also Marc Groenhuijsen & Ouwerkerk, Jannemieke W., Utima ratio en criteria voor strafbaarstelling in Europees perspectief, in Roosacthing strafrecht. Liber Amicorum Theo de Roos (Groenhuijsen, Marc S., Tijs Kooijmans & Ouwerkerk, Jannemieke W. eds, 2013).Google Scholar

¹⁵ The possibility of making a proposal in the field of criminal law including the type and level of criminal sanctions included in an EU directive appears in the COM(2011)573 of September 20, 2011, 8: “Regarding sanctions, ‘minimum rules’ can be requirements of certain sanction types (e.g. fines, imprisonment, disqualification), levels or the EU-wide definition of what are to be considered aggravating or mitigating circumstances”; It also appears in the Communication of the Commission on reinforcing sanctioning regimes in the financial services sector, COM(2010) 716 final of December 8, 2010, 14: “Any proposals in the field of criminal law should aim at ensuring appropriate coherence and consistency across different sectors, in particular when considering the type and level of criminal sanctions included in EU directives”; The European Commission page dedicated to the criminal law policy also specifies that “The EU can adopt directives providing for minimum rules regarding the definitions of criminal offences, for example, rules setting out which behavior is considered to constitute a criminal act and which type and level of sanctions are applicable for such acts”, http://ec.europa.eu/justice/criminal/criminal-law-policy/ (last visited February 13, 2016). Most recently, Directive 2014/57/EU on criminal sanctions for market abuse June 12, 2004 (OJ L 173/179) (which entered force on July 3, 2014) now explicitly prescribes a maximum term of imprisonment and Regulation No 596/2014 of June 12, 2014 (OJ L 173/1) provides for mandatory “administrative measures and sanctions.”Google Scholar

¹⁶ Towards an EU Criminal Policy: Ensuring the Effective Implementation of EU Policies Through Criminal Law, COM (2011) 573, at 8–9.Google Scholar

¹⁷ Id. at 9.Google Scholar

¹⁸ See Miettinen, Samuli, Criminal Law and Policy in the European Union 44ff. (2012)Google Scholar

The choice of instruments and their inherent limits will also remain a point of contention. Express provisions on approximation refer to directives as the legal instrument by which the Union may create minimum rules. Given substantial limitations to the Directive as an instrument, and to the potential lack of direct effect on instruments containing minimum rules, the question arises whether any provisions on the new Area of Freedom, Security and Justice (AFSJ) may allow directly applicable rules on criminal law to be created in the form of Regulation, or whether either these or other competences ostensibly outside the AFSJ can be exercised to circumvent AFSJ references to directives. If the narrative on the development of EU criminal competences can be seen as a contest between the centralizing effects of EU law and the desire of the Member States to retain criminal law as a relatively de-centralized policy area, then Lisbon has changed the rules but has not ended the game. What, for example, are ‘minimum rules‘?Google Scholar

¹⁹ See Art. 83(2) TFEU.Google Scholar

²⁰ See Case C-68/88, Commission v. Greece, 1989 E.C.R. 339 para. 24.Google Scholar

²¹ This is also the formula used in Art. 5 of Directive 2008/99/EC of November 19, 2008 on the protection of the environment through criminal law, December 6, 2008, O.J. (L 328) 28, p. 28–37.Google Scholar

²² Case C-265/95, Commission v. France, 1997 E.C.R. 595 paras. 52ff.Google Scholar

²³ This can be regarded as a principle in the sense of Art. 52(2).Google Scholar

²⁴ See Wagner, Gerhard, Private Law Enforcement Through ADR: Wonder Drug or Snake Oil, 51 Common Mkt. L. Rev. 165, 168 (2014) (On p. 169 Wagner speaks of a “triad of effectiveness, proportionality and dissuasiveness—or deterrence”).Google Scholar

²⁵ See Paul Craig & Gráinne de Búrca, Text, Cases and Materials 218 (6th ed. 2015).CrossRefGoogle Scholar

²⁶ See id. at 218.Google Scholar

²⁷ Case C-410/98, Metallgesellschaft & Hoechst v. Inland Revenue, 2001 E.C.R. 134.Google Scholar

²⁸ Case C-295-298/04 Manfredi v. Lloyd Adriatico Assicurazioni SpA et al, 2006 E.C.R. 461, para. 95; later confirmed in Case C-536/11, Bundeswettbewerbsbehörde v. Donau Chemie AG and Others, 2013 E.C.R. 366, para 24.Google Scholar

²⁹ See Craig & de Burca, supra note 25 at 218 et seq. This is also true with a view to Directive 2013/0185 (COD) of the European Parliament and of the Council 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. That Directive will be discussed under 3.2.Google Scholar

³⁰ We are obviously aware of the fact that there are many more provisions in EU law dealing with law enforcement. In that respect, we can, for example, refer to article 47 of the EU Charter of Fundamental Rights, providing a right to an effective remedy and to a fair trial, but also for example to Council Regulation No 44/2001 on jurisdiction, recognition and enforcement of judgments in civil and commercial matters—also known as The, Brussels I. latter instruments are obviously of importance as well, but they are not advocated as enforcement instruments for specific domains by the EU legislature, but rather as tools guaranteeing an effective access to justice for EU citizens and they do not specifically address the implementation and enforcement of particular policy domains. Consequently, those instruments remain outside of this paper's scope.Google Scholar

³¹ See Roger Van den Bergh, Should Consumer Protection Law Be Publicly Enforced?: An Economic Perspective on EC Regulation 2006/2004 and its Implementation in the Consumer Protection Laws of the Member States, in Collective Enforcement of Consumer Law 179, 180ff (Willem van Boom & Marco Loos eds., 2007).Google Scholar

³² Directive 2005/29/EC of the European Parliament and the Council of May 11, 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council, June 11, 2005, OJ L 149/22.Google Scholar

³³ See also Council Directive 90/314/EEC of June 13, 1990 (highlighting other directives that leave the design of enforcement options open and in this case with package travel, package holidays and package tours); Council Directive 93/13/EEC of April 5, 1993 (explaining unfair terms in consumer contracts).Google Scholar

³⁴ Recital 1. ex Art. 100a TEC pre-Amsterdam became (ex) Art. 95 TEC post-Amsterdam and is now Art. 114 TFEU.Google Scholar

³⁵ Commission staff working paper on the extended impact assessment of the Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), 10.Google Scholar

³⁶ See the Council Directive 93/13, of April 5, 1993, on unfair terms in consumer contracts, 1993, OJ L 95/29.Google Scholar

³⁷ Directive 98/27, of May 19, 1998 on injunctions for the protection of consumers' interests, June 11, 1998, OJ L 166 (EC).Google Scholar

³⁸ See also Article 3 of the Directive.Google Scholar

³⁹ Directive 2011/83, of 25 October 2011 on consumer rights, 2011, OJ (L 304) 64 (EEC).Google Scholar

⁴⁰ See Commission staff Working Document accompanying the proposal for a directive on consumer rights Impact Assessment Report, 2.Google Scholar

⁴¹ Except for the Czech and Slovak Republics' public enforcement was recognized as an indispensable element of the overall institutional framework of consumer protection in all CEE countries.Google Scholar

⁴² COM (1995) 163 final (May 10, 1995).Google Scholar

⁴³ See Engelbrekt, Antonina Bakardijeva, Public and Private Enforcement of Consumer Law, in Central and Eastern Europe: Institutional Choice in the Shadow of EU Enlargement, in New Frontiers of Consumer Protection—the Interplay Between Private and Public Enforcement 91, 109 (Fabrizio Cafaggi & Hans-W. Micklitz eds., 2009).Google Scholar

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⁴⁶ Recital 2, CPC Regulation.Google Scholar

⁴⁷ See Stuyck, Jules, Public and Private Enforcement in Consumer Protection: General Comparison EU-USA, in New Frontiers of Consumer Protection—the Interplay between Private and Public Enforcement 63, 79 (Fabrizio Cafaggi & Hans-W. Micklitzeds eds., 2009).Google Scholar

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⁴⁹ Id. at 6, referring to p. iii and pp. 45–48 of Public consultation summary.Google Scholar

⁵⁰ This was adopted together with a Regulation on Online Dispute Resolution. See Directive 2013/11, of the European Parliament and of the Council of May 21, 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC, OJ (L 165) 63 of June 18, 2013 (Directive on Consumer ADR) and Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes, OJ L 165/1 of June 18, 2013 (Regulation on Consumer ODR).Google Scholar

⁵¹ With the exception of health and education.Google Scholar

⁵² See for an extensive impact assessment: COM (2011) 793 (Nov. 29, 2011), SEC (2011) 1409 final (Nov. 29, 2011), COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council on Alternative Dispute Resolution for consumer disputes (Directive on consumer ADR) and Proposal for a Regulation of the European Parliament and of the Council on Online Dispute Resolution for consumer disputes (Regulation on consumer ADR).Google Scholar

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⁵⁵ Regulation (EC) No 1896/2006 of the European Parliament and of the Council of December 12, 2006 created a European order for payment procedure, O.J. (L 399), 1–32; likewise, recently amended by Regulation (EU) 2015/2421 of the European Parliament and of the Council of 16 December 2015 amending Regulation (EC) No. 861/2007 establishing a European Small Claims Procedure and Regulation (EC) No. 1896/2006 creating a European order for payment procedure, O.J. (L 341), 1–13.Google Scholar

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⁵⁸ See for the status quo of the process: http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm (last visited February 13, 2016).Google Scholar

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⁶⁰ Documents produced during this time entail: A Commission Green Paper on antitrust actions, (COM (2005) 672 (Dec. 9, 2005)); a White Paper in 2008 (COM (2008) 165 (April 2, 2008)). In 2008, the Commission also published a Green Paper on consumer collective redress (COM (2008) 794 (Nov. 27, 2008)).Google Scholar

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⁶² Towards a European Horizontal Framework for Collective Redress, COM (2013) 3539/3 (June 12, 2013) “Towards a European Horizontal Framework for Collective Redress”.Google Scholar

⁶³ European Parliament Resolution of February 2, 2012 “Towards a Coherent European Approach to Collective Redress”, 2011/2089(INI).Google Scholar

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⁶⁶ Fabrizio Cafaggi & Hans.-W. Micklitz, Administrative and Judicial Enforcement in Consumer Protection: The Way Forward, in New Frontiers of Consumer Protection—the Interplay between Private and Public Enforcement 401 (Fabrizio Cafaggi & Hans-W. Micklitzeds eds., 2009).Google Scholar

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⁷⁰ Competition Law and Policy in the EU and UK 80ff (5th edn, Rodger, Barry J. & Angus MacCulloch eds, 2015).Google Scholar

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⁷³ Regulation No 1/2003 which replaced the mentioned Regulation No 17 (which had identical provisions on fines), January 4, 2003, OJ L 1.Google Scholar

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⁷⁹ See Art. 3(2) of Directive 2014/104 EU.Google Scholar

⁸⁰ See Art. 3(3) of Directive 2014/104 EU.Google Scholar

⁸¹ See Recital (3) preceding Directive 2014/104 (on antitrust damage actions) (holding that anyone can claim compensation before national courts for the harm caused to them by an infringement of Articles 101 and 102 TFEU (the basic articles concerning EU competition law)).Google Scholar

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⁸⁵ See Recital 6 of Directive 2014/104 EU.Google Scholar

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⁹⁰ See Liu, Jing, Compensating Ecological Damage. Comparative and Economic Observations 268 (2013).Google Scholar

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⁹³ Art. 9 of the ELD.Google Scholar

⁹⁴ Art. 8(4)(a) of the ELD.Google Scholar

⁹⁵ Art. 14 of the ELD.Google Scholar

⁹⁶ Michael Faure & Kristel De Smedt, The ELD's Effects in Practice, in The EU Environmental Liability Directive: A Commentary 299 (Lucas Bergkamp & Barbara Goldsmith eds., 2013).Google Scholar

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⁹⁸ Directive 2004/35, art. 6.Google Scholar

⁹⁹ Based on Directive 2004/35, art. 12.Google Scholar

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¹⁰² Access to information, Directive 2003/4/EC.Google Scholar

¹⁰³ Public participation, Directive 2003/35/EC.Google Scholar

¹⁰⁴ Proposal for a Directive of the European Parliament and of the Council on access to justice in environmental matters, 2003COM 624 (Oct. 24, 2003).Google Scholar

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¹⁰⁹ See the evolution of the EU legislative competences in law enforcement sketched above in section B.Google Scholar

¹¹⁰ O.J. (L 255) 11 of September 30, 2005.Google Scholar

¹¹¹ See further on this directive, Michael Faure, The Environmental Crime Directive 2008/99/EC, Eur. J. of Consumer L. 193 (2011).Google Scholar

¹¹² To the extent that the Recommendation concerning collective redress likewise applies in the context of environmental policy. Note, however, that this is not binding.Google Scholar

¹¹³ For an overview of administrative environmental law enforcement in a few Member States (the Flemish Region in Belgium, the Netherlands, Germany and the UK) see Faure, Michael & Svatikova, Katarina, Criminal or Administrative law to Protect the Environment? Evidence from Western-Europe, 24(2) J. of Envtl. L. 253 (2012).Google Scholar

¹¹⁴ In the United States, insider trading is both a crime, which can be punished by monetary penalties and imprisonment, and also a civil offense. The public players also have competences, which could be classified as administrative. Overall, private enforcement seems to play a minor role only, see Ventoruzzo, M., Comparing Insider Trading in the United States and in the European Union: History and Recent Developments (May 26, 2014). European Corporate Governance Institute (ECGI) - Law Working Paper No. 257/2014; Bocconi Legal Studies Research Paper No. 2442049, p. 26, http://ssrn.com/abstract=2442049 or <http://dx.doi.org/10.2139/ssrn.2442049.CrossRefGoogle Scholar

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¹²⁵ Two important modifications relate to the expansion of the scope of the prohibition on insider trading (and the definition of attempted market manipulation), See Proposal for a Regulation on market abuse, at 29:Google Scholar

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¹²⁷ See Proposal for a Regulation on market abuse, at 47: Chapter 5: “Administrative measures and sanctions”, p. 47–48: One of the most revolutionary aspects of the proposal for a Regulation is that administrative measures and sanctions will be harmonized:Google Scholar

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¹³⁴ Commission Staff Working Paper, IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on insider dealing market manipulation (market abuse) and the Proposal for a Directive of the European Parliament and of the Council on criminal sanctions for insider dealing and market manipulation, SEC (2011) 1217 final (Oct. 20, 2011).Google Scholar

¹³⁵ Some stakeholders that expressed a preference for civil law enforcement are named only in footnote 140 (and 329, 348) of the impact assessment.Google Scholar

¹³⁶ Public consultation on a revision of the Market Abuse Directive (MAD), http://ec.europa.eu/internal_market/consultations/docs/2010/mad/consultation_paper.pdf (last visited February 14, 2016).Google Scholar

¹³⁷ See Tountopoulos, supra note 120, at 327.Google Scholar

¹³⁸ Tountopoulos, supra note 120, at 332.Google Scholar

¹³⁹ Recital 5 of Directive 2014/57/EU.Google Scholar

¹⁴⁰ Directive 2014/57/EU of the European Parliament and of the Council of April 16, 2014 on criminal sanctions for market abuse (Market Abuse Directive).Google Scholar

¹⁴¹ Thus, it cannot sufficiently consider specific nuances or details, such as proposals towards collective action (aiming at strengthening private enforcement) in some domains. Recall that the recommendation on collective redress has a horizontal character, but that it is nonbinding.Google Scholar

¹⁴² Obviously, it may be possible to have a much more nuanced approach, addressing, for example, whether enforcement either via a civil court or via an ADR body would be more indicated or, for example, addressing group litigation/collective action in detail. That would, however, for the purposes of this study go much too far and is moreover not needed immediately because we merely want to use our general framework to broadly test some of the differences in the European approach in law enforcement that we identified in the previous paper. For a more refined approach, equally incorporating group litigation, ADR and self-regulation see Weber, Franziska, The Law and Economics of Enforcing European Consumer Law - A Comparative Analysis of Package Travel and Misleading Advertising (2014).Google Scholar

¹⁴³ Obviously, this would vary to some extent in the different European countries.Google Scholar

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¹⁴⁵ Becker, Gary S., Crime and Punishment: An Economic Approach, 76 J. of Pol. Econ. 169, 172 et seq. (1968).Google Scholar

¹⁴⁶ See Van den Bergh, supra note 31, at 184.Google Scholar

¹⁴⁷ See Landes, William M. & Posner, Richard A., The Private Enforcement of Law, 4(1) J. Legal Stud. 1–6, 33 (1975).Google Scholar

¹⁴⁸ See Andrea Renda et al, Making Antitrust Damages Actions More Effective in the EU: Welfare Impact and Potential Scenarios (2007), at 562.Google Scholar

¹⁴⁹ See Posner, Richard, An Economic Approach to Legal Procedure and Judicial Administration, in The Economic Structure of the Law: The Collected Economic Essays of Richard A. Posner 290, 291 (Francesco Parisi ed., 2000) (referring to system costs as ‘direct costs’ for operating the legal dispute-resolution machinery).Google Scholar

¹⁵⁰ See A. Mitchell Polinsky & Steven Shavell, The Theory of Public Enforcement of Law, in Handbook of Law and Economics 405, 427 et seq. (Vol. 1, A. Mitchell Polinsky & Steven Shavell, 2007).Google Scholar

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¹⁵² See Shavell, supra note 144, at 268.Google Scholar

¹⁵³ See Ogus, Anthony, Regulation: Legal Form and Economic Theory 57 (1994); Christopher Hood, Henry Rothstein & Robert Baldwin, The Government of Risk: Understanding Risk Regulation Regimes, 112 (1st ed. 2001); Nuno Garoupa & Fernando Gomez-Pomar, Punish Once or Punish Twice: A Theory of the Use of Criminal Sanctions in Addition to Regulatory Penalties, Harvard Law School Olin, John M. Center for Law, Economics and Business Discussion Paper Series. Paper 308 1, 5, 17 (2000); James Wilson, Bureaucracy - What Government Agencies Do and Why They Do It (1989).Google Scholar

¹⁵⁴ See Shavell, The Fundamental Divergence between the Private and the Social Motive to Use the Legal System, 16 J. Legal Stud, 575, 599 (1997).Google Scholar

¹⁵⁵ See Shavell, Steven, Risk Sharing and Incentives in the Principal and Agent Relationship, 10(1) Bell J. Econ. 55, 57 et seq. (1979); Hugh Collins, Regulating Contracts 236 (1999).Google Scholar

¹⁵⁶ See Karl-Gustaf Löfgren, Torsten Persson & Weibull, Jorgen W., Markets with Asymmetric Information: The Contributions of George Akerlof, Michael Spence and Joseph Stiglitz, 104(2) Scandinavian J. of Econ. 195 (2002).Google Scholar

¹⁵⁷ See Keser, Claudia & Willinger, Marc, Experiments on Moral Hazard and Incentives: Reciprocity and Surplus-Sharing, in The Economics of Contracts Theories and Applications 293 (Eric Brousseau & Jean-Michel Glachant eds., 2002), in which a whole Section is devoted to the principal agent problem and moral hazard. Moral hazard arises because an individual does not internalize the full consequences of actions, and therefore, tends to act less carefully than otherwise.Google Scholar

¹⁵⁸ See Weber, Franziska & Faure, Michael, The Interplay between Public and Private Enforcement in European Private Law: Law and Economics Perspective, 4 Eur. Rev. Priv. L. 525 (2015).Google Scholar

¹⁵⁹ See Ogus, Anthony, Costs and Cautionary Tales: Economic Insights for the Law 283 (2006); Stigler, George J., The Optimum Enforcement of Law, 78 J. of Pol. Econ. 526 (1970).Google Scholar

¹⁶⁰ Part of the analysis of public law enforcement may likewise be true for the strengths and weaknesses of group litigation that could not be dealt with in detail in the context of this paper.Google Scholar

¹⁶¹ See Shavell, Steven, The Social Versus the Private Incentive to Bring Suit in a Costly Legal System, 11 J. Legal Stud. 333 (1982). To some extent, low cost dispute resolution bodies within the context of private law enforcement, like ADR or mediation, might mitigate the problem.Google Scholar

¹⁶² Ultimately, of course, tax payers' money finances the whole system.Google Scholar

¹⁶³ A public enforcer has a lower cost of information discovery because it can use the power of the state—such as the threat of jail, the power of the police to conduct searches and seizures of evidence, clandestine electronic surveillance, and under-cover agents; see Segal, Ilya R. & Whinston, Michael D., Public Vs. Private Enforcement of Antitrust Law: A Survey, Stanford Law and Economics Olin Working Paper No. 335, 6 (2006). (referring to antitrust cases).Google Scholar

¹⁶⁴ See Shavell, supra note 145 at 270; Hood, Rothstein & Baldwin, supra note 155, at 73.Google Scholar

¹⁶⁵ See Landes and Posner, supra note 147, at 29: An example would be competition authorities that do not only have more resources, but also wide investigate powers that an individual could not make use of. Also economies of scope can speak in favor of the involvement of a public authority; see Trebilcock, Michael J., Rethinking Consumer Protection Policy, in International Perspectives on Consumers' Access to Justice 68, 84 (Charles Rickett & Thomas Telfer eds., 2003).Google Scholar

¹⁶⁶ This is, for example, in the consumer area possible via Regulation 2006/2004 on consumer protection cooperation (referred to as the CPC-Regulation) (O.J. (L 364) of December 9, 2004, p. 1–11).Google Scholar

¹⁶⁷ See Fabrizio Cafaggi & Hans-W. Micklitz, Collective Enforcement of Consumer Law: A Framework for Comparative Assessment, 16(3) Eur. Rev. of Priv. L. 391, 417 (2008).Google Scholar

¹⁶⁸ A problem with public enforcement is, however—as we will discuss below—that public agencies may be subject to capture.Google Scholar

¹⁶⁹ See Wittman, Donald, Prior Regulation Versus Post Liability: The Choice between Input and Output Monitoring, 6 J. Legal Stud. 193, 207 (1977); overall little empirical research has been done on regulatory agencies within consumer protection; see Meili, Stephen, Consumer Protection, in The Oxford Handbook of Empirical Legal Research 176, 186 (Peter Cane & Herbert Kritzereds eds., 2010).Google Scholar

¹⁷⁰ See Shavell, Steven, Foundations of Economic Analysis of Law 49 (2004); Francesco Parisi, The Economic Structure of the Law the Collected Economic Essays of Richard A. Posner 290 (Vol. 1, 2000).Google Scholar

¹⁷¹ See Hans-Bernd Schäfer, The Bundling of Similar Interests in Litigation. The Incentives for Class Action and Legal Actions taken by Associations, 9(3) Eur. J. L. & Econ. 183, 186 (2000); Hans-W. Micklitz & Astrid Stadler, The Development of Collective Legal Actions in Europe, Especially in German Civil Procedure, 17 Eur. Bus. L. Rev. 1473, 1476 (2006).Google Scholar

¹⁷² See Roger Van den Bergh & Louis Visscher, The Preventive Function of Collective Actions for Damages in Consumer Law, 1 Erasmus L. Rev. 5, 24 (2008); similarly, see Schäfer, supra note 171, at 184.Google Scholar

¹⁷³ See Schäfer, supra note 171, at 199; Coffee, John C. Jr, Class Wars: The Dilemma of the Mass Tort Class Action, 95(6) Colum. L. Rev. 1343–1465, 1414 (1995); Koniak, Susan P. & Cohen, George M., Under Cloak of Settlement, 82 Virginia L. Rev. 1051, 1113 (1996); Cafaggi & Micklitz, supra note 167, at 411.Google Scholar

¹⁷⁴ This merits a more careful analysis. See Weber, Franziska, Is ADR the Superior Mechanism for Consumer Contractual Disputes?—an Assessment of the Incentivizing Effects of the ADR Directive, 38(3) J. Consumer Pol'y 265 (2015).Google Scholar

¹⁷⁵ Mark Tuil & Louis Visschereds, New Trends in Financing Civil Litigation—A Legal, Empirical and Economic Analysis (2010).Google Scholar

¹⁷⁶ There is a strong objection to the introduction of punitive damages in Europe as set out before. Injunctive relief as granted by private bodies may yield similar results in terms of deterrence, see Faure, Michael, Anthony Ogus & Niels Philipsen, Curbing Consumer Financial Losses: The Economics of Regulatory Enforcement, 31(2) Law & Pol'y 161, 176 (2009).Google Scholar

¹⁷⁷ See Shavell, supra note 144, at 267. Other incentives for an individual are the desire to avoid future harm, the retributive motive, and possibly a fear of reprisal.Google Scholar

¹⁷⁸ See Van den Bergh, supra note 31, at 195; See also Ogus, Anthony, Enforcing Regulation: Do we need the criminal law?, in New Perspectives on Economic Crime 42, 44 (Hans Sjörgen & Göran Skogheds, 2004) (distinguishing the burden of proof and procedural safeguards between criminal law and administrative law from high to low).Google Scholar

¹⁷⁹ See Garoupa & Gomez-Pomar, supra note 153, at 5; Faure, Ogus & Philipsen, supra note 176, at 176.Google Scholar

¹⁸⁰ For details see Faure, Ogus & Philipsen, supra note 176, at 176.Google Scholar

¹⁸¹ See Bowles, Roger, Michael Faure & Nuno Garoupa, The Scope of Criminal Law and Criminal Sanctions: An Economic View and Policy Implications, 35(3) J. L. & Soc'y 405 (2008); Roberto Galbiati & Garoupa, Nuno M., Keeping Stigma out of Administrative Law: An Explanation of Consistent Beliefs, 15 Sup. Ct. Econ. Rev. 274 (2007); Keith Hylton & Vikramaditya Khanna, Toward an Economic Theory of Pro-Defendant Criminal Procedure, Discussion paper No. 318.3 (2001).Google Scholar

¹⁸² See Richard A. Posner, An Economic Approach to Legal Procedure and Judicial Administration, 2(2) J. Legal Stud. 399, 410 (1973).Google Scholar

¹⁸³ See Van den Bergh, supra note 31, at 196.Google Scholar

¹⁸⁴ See Polinsky & Shavell, supra note 15051, at 419. On low probabilities of detection; see also Landes & Posner, supra note 148, at 36. There is also the possibility to impose fines that exceed the harm.Google Scholar

¹⁸⁵ See Shavell, supra note 1444, at 275.Google Scholar

¹⁸⁶ See Bowles, Faure & Garoupa, supra note 181, at 402; Steven Shavell, Criminal Law and the Optimal use of Nonmonetary Sanctions as a Deterrent, Colum. L. Rev. 1247 (1985); Shavell, supra note 165, at 544.Google Scholar

¹⁸⁷ See Polinsky & Shavell, supra note 15050, at 435. If a person is old or dying from a disease, however, imprisonment cannot fulfil its full purpose; see Shavell supra note 166, at 532. Here, for example, incapacitation measures are necessary and desirable.Google Scholar

¹⁸⁸ See Bowles, Faure & Garoupa, supra note181, at 405.Google Scholar

¹⁸⁹ See Trebilcock, supra note 16565, at 84; See Faure, Ogus & Philipsen, supra note 17676, at 178, expand on the issue of licenses and how this can possibly have a higher deterrent effect for traders than imprisonment.Google Scholar

¹⁹⁰ See Shavell, supra note 165, at 571.Google Scholar

¹⁹¹ In most legal systems, prosecutors are part of the independent judiciary and stand under the control of the Minister of Justice who is subject to political control. He is supposed to make decisions on prosecution and hence use his discretion in the public interest. Systems of transparency and accountability, however, can help to guarantee that this will effectively be the case in practice. If those are lacking, there is a danger that the available discretion would be abused.Google Scholar

¹⁹² The European country in which this is most developed seems to be Norway: Johnsen, John T., Enforcement of Civil Claims in Criminal Litigation: The Norwegian Example, in Enforcement and Enforceability—Tradition and Reform 313–326 (Remco van Rhee & Alan Uzelaceds, 2010); for Germany see §§ 403–406d Strafprozessordnung (Act on Criminal Procedure, StPO). Similar provisions exist also in Belgium, France, and the Netherlands, see Ogus, Anthony, Michael Faure, and Niels Philipsen, Best Practices for Consumer Policy: Report on the Effectiveness of Enforcement Regimes, in Report prepared for the UK Department of Trade and Industry and OECD 37 (2006).Google Scholar

¹⁹³ We do realize that this entails the heavy assumption that improving private enforcement is usually less costly than using public enforcement.Google Scholar

¹⁹⁴ Van den Bergh, supra note 31, at 195.Google Scholar

¹⁹⁵ Van den Bergh, supra note 31, at 186.Google Scholar

¹⁹⁶ Gerrit De Geest, The Signing-without-reading Problem: An Analysis of the Directive on Unfair Contract Terms, in KonsequenzenwirtschaftlicherNormen 213 (Hans-Bernd Schäfer&; Hans-Jürgen Lwowskieds, 2002).Google Scholar

¹⁹⁷ See Faure, Ogus & Philipsen, supra note 176, at 173–76.Google Scholar

¹⁹⁸ This was discussed in the same way at the Fachexpertengespräche 2014 with consumer law experts from Germany, Austria, Switzerland, Luxemburg and Liechtenstein at the Federal Ministry of Justice and Consumer Protection, Berlin, 16/17 November 2014.Google Scholar

¹⁹⁹ Faure, Ogus & Philipsen, supra note 176, at 180.Google Scholar

²⁰⁰ A strong case in favor of private law enforcement is made by Davis, Joshua P. & Lande, Robert H., Defying Conventional Wisdom: The Case for Private Antitrust Enforcement, 48 Ga. L. Rev. 1 (2013). The same authors acknowledge a stronger deterrent effect of private law enforcement than of criminal law enforcement of antitrust laws in the US. Lande, Robert H. & Davis, Joshua P., Comparative Deterrence From Private Enforcement and Criminal Enforcement of the U.S. Antitrust Laws, BYU L. Rev. 315, 317 (2011). Given the different nature of law enforcement in the US and the EU, they assert a positive effect of the Directive on antitrust damages and claim that it does not go far enough (Lande, Robert H., The Proposed Damages Directive: The Real Lessons from the United States, (2014), University of Baltimore Legal Studies Research Paper No. 2014-19.Google Scholar

²⁰¹ See for a detailed analysis of the advantages and disadvantages of punitive damages, Lotte Meurkens, Punitive Damages: The Civil Remedy in American Law, Lessons and Caveats for Continental Europe (2014).Google Scholar

²⁰² Van den Bergh, supra note 71, at 17.Google Scholar

²⁰³ Generally, violations of competition law—more particularly, hardcore cartels—can generate high gains, in principle substantially higher than, for example, misleading advertising on a—still—competitive market.Google Scholar

²⁰⁴ See Wouter P.J. Wils, Is Criminalization of EU Competition Law the Answer?, 28 World Competition 117 (2005); Roger Van den Bergh & Michael Faure, Critical Issues in the Enforcement of the Anti-Monopoly Law in China: A Law and Economics Perspective, in Competition Policy and Regulation. Recent Developments in China, the US and Europe 54, 56 et seq. (Michael Faure & Xinzhu Zhang eds., 2011).Google Scholar

²⁰⁵ See Faure, Michael & Weber, Franziska, Dispersed Losses in Tort Law—An Economic Analysis, 6(2) J. Eur. Tort L. 163 (2015).Google Scholar

²⁰⁶ This has inter alia strongly been argued by Anthony Ogus & Carolyn Abbot, Sanctions for Pollution: Do We Have the Right Regime?, 13 J. Envtl. L. 283 (2002).Google Scholar

²⁰⁷ Michael Faure, Environmental Crimes, in Criminal Law and Economics 320 (Vol. 3, Nuno Garoupa ed., 2009).Google Scholar

²⁰⁸ See Faure, Michael & Leger, Claire, Towards a Harmonization of Insider Trading. Criminal Law at EU Level?, 9(2) Brooklyn J. Corp., Fin. & Commercial L. 387 (2015); Nasser Arshadi, Insider Trading Liability and Enforcement Strategy, 27(2) Fin. Mgmt. 70, 71 (1998) (regarding the US law at that time): Since managers and directors are often the beneficiaries in insider trading, they have little incentive to sue; given that most shareholders own a small fraction of the outstanding shares, they often cannot afford the cost of taking legal action. The principal incentive to the enforcement of this section is left with attorneys who track 16(a) filings and file suit on behalf of a small shareholder where the court grants fees for the plaintiff's attorneys.Google Scholar

²⁰⁹ Standard literature: Polinsky & Shavell, supra note 151—public enforcement is optimal when it is too costly for the individual to identify the wrongdoer.Google Scholar

²¹⁰ This refers to persons providing “tips”, meaning, relevant information which may affect stock prices. Cox, James D., Insider Trading and Contracting: A critical response to the “Chicago School”, Duke L. J. 628, 658 (1986) sees scope for economies of scale and benefits of public enforcement.Google Scholar

²¹¹ This is suggested for the US context, Ventoruzzo, supra note 1140, at 589.Google Scholar

²¹² Private actions in the US are arguably free-riding on the investigations carried out by the SEC, see Cox, supra note 210, at 658.Google Scholar

²¹³ Elizabeth Szockyj & Gilbert Geis, Insider Trading: Patterns and Analysis, 30 J. Crim. Just. 273 (2002).Google Scholar

²¹⁴ See Macey, Jonathan R., Insider Trading: Economics, Politics and Policy 5 (1991); Easterbrook, Frank H., Insider Trading as an Agency Problem in Principals and Agents: The Structure of Business, Pratt, John W. & Richard Zeckhauser eds, 81 (1985).Google Scholar

²¹⁵ Newkirk, Thomas C., Speech by SEC Staff: Insider Trading—A U.S. Perspective, https://www.sec.gov/news/speech/speecharchive/1998/spch221.htm (last visited Mar. 3, 2016).Google Scholar

²¹⁶ See J.C. Coffee Jr., Introduction: Mapping the Future of Insider Trading Law: Of Boundaries, Gaps, and Strategies, Colum. Bus. L. Rev. 281 (2013), footnote 3, observing that “insider trading is seldom enforced through private litigation, but instead through criminal and SEC enforcement.” as quoted by Ventuzzo.Google Scholar

²¹⁷ Beny, Laura N., Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence, 7(1) Am. L. & Econ. Rev. 144, 176 (2005).Google Scholar

²¹⁸ As identified by Rafael La Porta, Florencio Lopez-De-Silanes & Andrei Shleifer, What Works with Securities Law, LXI(1) The J. Fin. 1, 27 (2006). Beny, supra note 2173, at 174 finds, on the other hand, that public law enforcement seems to be more important. The most deterrent effect stems from the possibility to impose criminal sanctions. The author acknowledges, however, that no account was taken of liability rules, allocations of evidentiary burdens or general rules of litigation, and administrative procedure (p. 176) which is why no strong conclusions can be drawn from the study yet.Google Scholar

²¹⁹ See supra Table 1.Google Scholar

²²⁰ See generally on policy mixes, the seminal work of Neil Gunningham & Peter Grabosky, Smart Regulation. Designing Environmental Policy (1998).Google Scholar

²²¹ See generally Shaw, Jane S., Public Choice Theory (2002), http://www.econlib.org/library/Enc1/PublicChoiceTheory.html (last visited March 3, 2016) (discussing public choice theory, which models the way that interest groups affect collective decision making); see Maloney, Michael T. & Mc, Robert E.Cormick, A Positive Theory of Environmental Quality Regulation, 25 J. L. & Econ. 99 (1982).Google Scholar

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²²³ See generally Becker, Gary S., A Theory of Competition among Pressure Groups for Political Influence, 98(3) Quarterly J. Econ. 371, 386, 394–95 (1983), (asserting that non-cooperative competition between pressure groups for political influence favors efficiency). Empirical evidence of the importance of such a countervailing power is, in the environmental area, inter alia provided by Seth Binder & Eric Neumayer, Environmental Pressure Group Strength and Air Pollution: An Empirical Analysis, 55(4) Ecological Econ. 527, 528 (2005).Google Scholar

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²²⁶ For details see the discussion supra section C III 2.Google Scholar

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²²⁸ The names and competences of the individual DGs also keep changing.Google Scholar

²²⁹ See Recommendation.Google Scholar

²³⁰ With the new Juncker Commission, the traditional restructuring of the DGs and their areas of competence has again taken place, http://ec.europa.eu/about/juncker-commission/structure/index_en.htm (last visited February 14, 2016).Google Scholar