Mass Damages in the Netherlands : To Collect or not to Collect, That is the Question

Roger Van den Bergh has always shown a great interest in the use of legal remedies to correct market failures either caused by concentrations (in his publications on competition law) or by negative externalities (in his publications on accident law). In that respect, Roger often stressed that it is not only important to have adequate material legal provisions in place to reach the goal of curing market failures, but that procedural remedies are at least as important, more particularly when, for example because damages would be wide-spread, individual victims would lack sufficient incentives to bring private enforcement actions. For that reason Roger has often paid attention to collective action problems, more particularly in the field of competition law3 and has often argued in favour of an appropriate design of collective actions to stimulate private enforcement of competition law.4 Because to a large extent the reasons why in case of widespread damages private enforcement often fails also apply to the domain of consumer law, Roger has made a similar plea in favour of an appropriately designed collective action to remedy enforcement failures in the consumer law area.5 Roger has been an important source of inspiration, teacher and co-author who literally accompanied both of us in our first steps on the road towards an academic pursuit of Law and Economics. We owe most of what we know today about Law and Economics to Roger, and it is for that reason that we have chosen this important topic of collective action as the topic for the contribution with which we wish to honour our friend and teacher Roger Van den Bergh. The reason for choosing this topic is not only that it has been one of the issues on which Roger has done a lot of work and which, moreover, relates to his interests in competition law, consumer law and accident law. It is also an area which in the country where Roger has been working for the past 25 years (the Netherlands) has been in full evolution. To some extent in Western-Europe the Netherlands may have been leading in the debate on facilitating collective actions of consumer claims. There is currently a legislative draft which proposes to introduce a collective damages action, which in itself is desirable from a Law and Economics perspective. However, the draft has particular features which may equally worry Roger. The problem, as we will explain below, is that the draft refers to an ‘Exclusive Representative’ which to some extent runs counter to what Roger always has defended, being that also in collective action it remains important to have competition between representatives. Roger was always critical, for example, of the idea of granting an exclusive monopoly of representation to one consumer organisation. It is for that reason that in our contribution we will critically review the Dutch proposals concerning collective damage actions. The topic is of great interest, also because Roger has already critically addressed the European Directive on damages actions6 and he will undoubtedly still use the economic analysis to provide a further critical approach to European developments in this domain. We proceed as follows: in section 2 we briefly recall the economic theory which provides the basis for the collective action; then in section 3 we discuss the current situation in the Netherlands as far as collective damage actions is concerned and focus on the draft bill in section 4. Section 5 concludes.