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Part II Non-Contractual Obligations Arising Out of Tort/Delict, 6 Unfair Competition/Restriction of Competition

From: The Rome II Regulation: The Law Applicable to Non-Contractual Obligations: Updating Supplement

Andrew Dickinson

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Applicable law — Breach of contract — Calculation of damages — Unfair competition — Scope of the law applicable under the Rome II Regulation — Collective redress

(p. 61) Unfair Competition/Restriction of Competition

B. The Nature of Article 6 and Its Relationship to Article 4

6.11  (n 39) Add Recital (21) was referred to approvingly by the German Bundesgerichtshof‎ in its first decision on the Rome II Regulation (Decision XaZR 19/08 (9 July 2009), para 19) (6.41 below).

Line 5—Insert footnote 39A after ‘appear to suggest’ Also M Hellner, ‘Unfair Competition and Acts Restricting Free Competition’ (2007) 9 YPIL 49, 51–5.

C. The Law Applicable to Non-Contractual Obligations Arising Out of Acts of Unfair Competition (Arts 6(1) and 6(2))

6.15  Insert footnote 47A after heading ‘Scope and Relationship with Other Rules’ For discussion of the approach to characterization under Art 6, see J Fitchen, ‘Choice of Law in International Claims Based on Restrictions of Competition: Art 6(3) of the Rome II Regulation’ (2009) 5 J Priv Int L 337, 346–52.

6.16  (n 48) The cross-reference to Leistner is to ‘n 3 above’.

6.25  (n 66) Add For the view that the common law rules creating the English tort of passing-off are capable of having overriding mandatory effect under the Regulation, see Cheshire, North & Fawcett, 850–1. The argument is unsupported by authority, raises questions of EC free movement law and seems, in any event, unlikely to be tested given the ‘market oriented’ approach of Art 6(1).

6.29  (n 80) Add Also Dicey, Morris & Collins, 3rd supplement, paras S35–218.

(p. 62) (p 406—line 25) Insert footnote 80A after ‘rather than Art 6(2)’ Dicey, Morris and Collins, 3rd supplement, paras S35–218, but compare Cheshire, North & Fawcett, 810. Also C Wadlow, ‘The new private international law of unfair competition and the “Rome II” Regulation’ (2009) 4 Journal of Intellectual Property Law and Practice 789, 792–3.

6.30  (n 82) Insert text after ‘Ch 4 above’ Also M Hellner, 6.11 above, 56–8; C Wadlow, 6.29 above, 793–6.

6.31  (p 407—line 4) Insert text after ‘mutually exclusive’ Although a factual scenario may, no doubt, generate separate non-contractual obligations falling within both Art 6(1) and Art 6(3), it would be undesirable if the autonomous classification of a single obligation depended on the claimant’s election or the label attached to it.93A

(n 95) Add Also T Rosenkranz and E Rohde, ‘The Law Applicable to Non-Contractual Obligations Arising Out of Acts of Unfair Competition and Acts Restricting Free Competition Under Article 6 Rome II Regulation’ (2008) 26 Nederlands internationaal privaatrecht‎ 435–6.

6.33  (n 96) Add at end The correspondence with Arts 81 and 82 of the EC Treaty (now TFEU, Arts 101 and 102) and the reference in Recital (23) to ‘national … competition law’ strongly suggests that claims to enforce national laws (of a Member State or otherwise) will fall outside Art 6(3) if they predominantly pursue an objective different from that pursued by Arts 81 and 82 (see Council Regulation (EC) No 1/2003, Recital (8) and Art 3(3); also R v IB [2009] EWCA Crim 2575).

(n 99) Add L de Lima Pinheiro (2008) 44 RDIPP 5, 24; E Rodriguez Pineau, ‘Conflict of Laws Comes to the Rescue of Competition Law: The New Rome II Regulation’ (2009) 5 J Priv Int L 311, 319–20.

6.34  (n 100) Add See, generally, P A De Miguel Asensio, ‘The Private International Law of Intellectual Property and of Unfair Commercial Practices: Convergence or Divergence’ in S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, 2009).

Line 10—Insert footnote 103A after ‘Regulation’ cf D van Engelen, ‘Rome II and Intellectual Property Rights: Choice of Law Brought to a Standstill’ (2008) 26 Nederlands internationaal privaatrecht‎ 440, 440–2.

(p. 63) Add at end of paragraph In a recent decision on foreign copyright infringement,103B the Court of Appeal appears to suggest that, for the purposes of the English law rule of ‘non justiciability’ known as the Moçambique rule,103C the concept of ‘intellectual property rights’ includes the English tort of passing off and ‘unfair competition’,103D explaining that ‘[c]ommercially speaking they are all the same sort of right — a right to exclude others’. As a legal definition, this appears unworkable.

6.41  Line 3—Insert footnote 113A after ‘commercial practices’ The German Bundesgerichtshof‎, in its first decision on the Rome II Regulation (Decision XaZR 19/08 (9 July 2009), para 19; noted V Gaertner, <http://conflictoflaws.net/2010/german-judgment-on-rome-ii/>) left open the question whether an action to restrain the use of unfair terms in consumer contracts falls within Art 4 or Art 6(1) of the Regulation, but was in no doubt that the Regulation applied to cases of this type. The Court pointed to Recital (21) of the Regulation as supporting the view that both Art 4 and Art 6(1), in this context, required that consumers be protected according to the law of the place where there collective interests are affected (cf Main work, 6.11–6.13, 6.56–6.57).

6.49  (n 122) Add Also M Hellner, 6.11 above, 56.

(n 124) Add The German Bundesgerichtshof‎ has left open the question whether Art 6(1) of the Rome II Regulation applies to actions of this kind (6.41 above).

(n 126) Add For the meaning attributed to the ‘collective interests of consumers’ here and elsewhere in EC legislation, see M Hellner, 6.11 above, 55.

With effect from 29 December 2009, the Injunctions Directive will be repealed and replaced by Directive (EC) No 2009/22 on injunctions for the protection of consumer interests (OJ L110, 30 [1.5.2009]) (the ‘2009 Injunctions Directive’). Art 2(2) of 2009 Injunctions Directive, following the language of corresponding provision in the original Directive, provides that ‘[t]his Directive shall be without prejudice to the rules of private international law with respect to the applicable law, that is, normally, either the law of the Member State where the infringement originated or the law of the Member State where the infringement has its effect’. The closing words of this provision, formerly a crude attempt to summarize (p. 64) the Member States’ relevant rules of applicable law, fail to take into account in any way the changes introduced by the Rome II Regulation and seem wholly inadequate.

6.54  (n 133) Add This sentence does not appear in Dicey, Morris & Collins 3rd supplement where the view is expressed (paras S35–217) that ‘there would appear to be no requirement of a “substantial effect”’. Also M Hellner, 6.11 above, 64. cf T Rosenkranz and E Rohde, 6.31 above, 437.

6.55  (n 138) Insert at beginning of footnote Dicey, Morris & Collins, 3rd supplement, paras S35–217.

6.57  (p 418—line 8) Insert footnote 142A after ‘economic reality’ Dicey, Morris & Collins, 3rd supplement, paras S35–215A.

D. The Law Applicable to Non-Contractual Obligations Arising Out of Restrictions of Competition (Art 6(3))

6.62  (p 419—line 7) Insert footnote 147A after ‘the EC Treaty’ See, on this point, M Hellner, 6.11 above, 60. cf J Fitchen, 6.15 above, 360–4, arguing that it is not appropriate to use, for this purpose, the market definition techniques developed by the Commission and the ECJ in applying Arts 81 and 82. He favours a conception of ‘the market’ in terms of a national market corresponding with the territory of a particular legal system (ibid, 363–4).

6.64  (n 173) Add For a critical appraisal of the possible impact of the Mosaikbetrachtung‎ in obstructing claims based on infringement of competition law, see J Fitchen, 6.15 above, 355–8.

Add footnote 175A at end of paragraph Dicey, Morris & Collins, 3rd supplement, paras S35–215A. Also J Fitchen, 6.15 above, 363–4.

6.65  Add footnote 178A at end of paragraph Dicey, Morris & Collins, 3rd supplement, paras S35–220; E Rodriguez Pineau, 6.33 above, 321–3. Compare M Hellner, 6.11 above, 61–4, speculating that the alteration of the recital in the Common Position was accidental. Also J Fitchen, 6.15 above, 365–6.

6.66  Add footnote 180A at end of paragraph Also J Fitchen, 6.15 above, 366–9.

F. The Private Enforcement of Competition Law—Future Development

6.76  (n 194) Add For comment on the White Paper, see Max Planck Institute for Intellectual Property, Competition and Tax Law, ‘European Commission — White Paper: Damages Actions for Breach of the EC Antitrust Rules’ (2008), available at <http://www.ip.mpg.de/shared/data/pdf/max_planck_instiute_munich_white_paper_on_damage_actions.pdf>.

For an analyis of the Rome II Regulation as an instrument supporting the private enforcement of competition law, see E Rodriguez Pineau (6.33 above).

6.78  (n 202) Add Also (1) the report of the Civil Justice Council (Main work, 6.77, n 201), and (2) the UK Government’s response in July 2009, available at <http://www.justice.gov.uk/publications/docs/government-responsecjc-collective-actions.pdf>, rejecting the introduction of a generic right of collective action in favour of a sector based approach (such as the collective redress proposals contained in the recent Financial Services Bill before the UK Parliament—but not adopted within the Financial Services Act 2010—and in the White Paper, ‘A Better Deal for Consumers: Delivering Real Help Now and Change for the Future’ proposing creation of a Consumer Advocate). For a comparative survey of collective redress procedures in the Member States, see D Fairgrieve and G Howells, ‘Collective Redress Procedures—European Debates’ (2009) 58 ICLQ 379.

Insert new paragraphs 6.79–6.80

6.79  In late 2008, the Commission published its Green Paper on Consumer Collective Redress203 following this with a more detailed discussion paper for a consultation with stakeholders held on 29 May 2009.204

(p. 66) The discussion paper comments (paras 31–2):

The Brussels I Regulation on jurisdiction and recognition and enforcement of judgements as well as the Rome I/II Regulations on the applicable law for contractual and non-contractual obligations may facilitate to a certain extent the use of the national and EU enforcement and redress instruments in cross-border situations. The Small Claims Regulation foresees that a judgement given in a Member State under the European Small Claims Procedure is automatically recognised and enforced in another Member State.

However, these tools are either not specifically designed with a focus on mass claims (i.e. Commission Recommendations on ADR and the Small Claims Regulation) or do not enable a group of consumers to receive compensation because of an illegal practice of a trader. The existing instruments related to jurisdiction and recognition and enforcement of judgements (i.e. Brussels I Regulation) as well as on applicable law (i.e. Rome I/II Regulations) do not contain specific provisions on mass claims. Therefore, the instruments currently available at EU level do not directly tackle the inefficiency of the current legal framework in compensating consumers in mass claims. The current situation with existing gaps and weaknesses of the existing system leads to uncertainty for consumers and traders and creates a justice gap, i.e. not all consumers and traders in the EU have the same possibilities to solve mass disputes efficiently.

In relation to a possible EC wide judicial collective redress mechanism, the discussion paper suggests as a possible solution for the question of applicable law (para 61):

Applicable law: in order to facilitate the handling of the case, the applicable law should be the law of the Member State where the market is most affected for the test case and the law of the Member State where the consumers have their habitual residence for the follow-up procedure. An adaptation of EU instruments of private international law would be necessary.

The Commission’s Feedback Statement on this consultation records that:205

Stakeholders from all categories underlined the question of applicable law and competent jurisdiction as an inherent problem to the European collective redress mechanism. One industry representative even warned that the development of a consumer collective redress system in Europe would give rise to a multitude of possible jurisdictions, based on the domicile of affected consumers and the courts being burdened with applying different substantive laws. It was indeed pointed out by a legal practitioner that the criterion of the most affected market may not allow determining with legal certainty the competent jurisdiction.

(p. 67) Some industry and consumer representatives, as well as some legal practitioners did not agree that the rules contained in the Brussels I, Rome I and Rome II Regulations should be altered.

Several industry representatives and several legal practitioners underlined the practical difficulties (eg the application of several substantial laws) implied by the adoption of the most-affected market criterion to determine the competent court and applicable law, particularly if an opt-out system was established.

6.80  Following publication of its White Paper on anti-trust damages actions (Main work, 6.76), the Commission has prepared a draft proposal for a Council Directive on rules governing damages actions for infringements of Arts 81 and 82 of the EC Treaty. The draft, which requires Member States to ensure full compensation by enabling an action for damages either individually or by a group action, (now TFEU, Arts 101–102), has proved highly controversial and has not yet been published.206 Aside from a passing reference in the explanatory memorandum to Art 6(3) of the Rome II Regulation, it does not address the questions of the law applicable to these damages claims.(p. 68)


93A  Main work, 3.129–3.139. Michael Hellner (6.11 above, 69), suggests that the concepts of ‘unfair competition’ and ‘restrictions of competition’ will likely overlap, but it is unclear whether his focus is on their autonomous legal definition or their practical application to a single set of facts. The latter, but not the former, appears possible under the Regulation. Also J Fitchen, 6.15 above, 347–8.

103B  Lucasfilm Limited v Ainsworth [2009] EWCA Civ 1328.

103C  8.18A–C below.

103D  Lucasfilm, n 103B above, [181], reason (iii).

203  COM (2008) 794 final [27.11.2008].

204  This document, the Green Paper and the Commission’s Feedback Statement (text to n 205 below) are available at <http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm>.

205  Feedback Statement, pp 4, 6.

206  An undated draft is available at <http://.allegati.unina.it/postlaurea/perf/Exclusiva_Juridico.pdf>.