Directive on antitrust damage claims adopted by the European Parliament
July 2014 | SPOTLIGHT | COMPETITION LAW
Financier Worldwide Magazine
On 17 April 2014 the European Parliament adopted the Directive 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 (the ‘Directive’). The Directive aims at fostering private law enforcement of cartel damage claims while at the same time protecting the effectiveness of leniency programs.
According to the jurisprudence of the European Court of Justice, any natural or legal person is entitled to claim compensation for the harm caused by an infringement of the EU competition rules. In addition, private law enforcement is an important complementary tool to the public enforcement carried out by competition authorities, since it increases Europe’s competitiveness to the ultimate benefit of European citizens and businesses.
In 2013 the Commission estimated the damages caused by hardcore cartels in the EU to be between €25bn and €69bn per year. However, victims often face a number of obstacles in obtaining compensation. Difficulties relating to the access to evidence held by other parties or by antitrust authorities, to the recognition of the decisions of national competition authorities and to the period of limitation for damage actions are a few of the main problems. Moreover, significant discrepancies between the legislation of the Member States lead to an uneven enforcement of the right to compensation.
In order to provide a more effective and uniform legal framework in the Member States, the Commission adopted on 11 June 2013 a proposal for the Directive. Political trilogues and technical meetings involving the European Commission, Parliament and Council followed in order to reach an agreement on the text in first reading of the ordinary legislative procedure. This agreement was reached on 20 March 2014, upon which the European Parliament adopted the agreed text. The next and last step in the legislative procedure is the final approval by the Council of Ministers.
Regarding the access to information and evidence, the Directive provides that national courts shall have the power to order parties to the proceedings, as well as third parties, to disclose relevant evidence in their control. The disclosure request shall contain reasonable and sufficient justification to support the plausibility of the claim for damages, and the person from whom disclosure is sought shall have the opportunity to be heard. National courts must observe the proportionality of the disclosure and take necessary measures to protect confidential information. For certain categories of documents, disclosure may only be ordered after the competition authority has closed its proceedings. Furthermore, if a party or a third party is unable or cannot reasonably provide the evidence requested, national courts shall be able to request disclosure from the competition authority.
One main issue of concern regarding the disclosure of information and evidence refers to the interference with leniency programs. Undertakings or natural persons participating in leniency programs voluntarily provide information concerning their knowledge of a cartel and their role therein, in view of obtaining immunity or the reduction of fines. In the absence of a clear rule, the jurisprudence of the European Court and of the courts of Member States were contradictory as to whether victims of cartels should be entitled access to the file of the national competition authorities. The Directive puts an end to this uncertainty and provides that leniency statements and settlement submissions shall not be disclosable, since allowing disclosure would represent a disincentive to the participation in leniency programs, which are an important instrument to the discovery of cartels and to antitrust public enforcement.
As an additional means to protect leniency recipients, as a derogation to the rule of joint liability of infringers for the full compensation of victims, immunity recipients shall generally only be liable to their own direct or indirect purchasers or providers. Only where full compensation cannot be obtained from other infringers shall leniency recipients be held liable to other injured parties. A similar exception to the rule of joint liability shall apply to small- or medium-sized enterprises under certain strict conditions.
Another important topic tackled by the Directive is the recognition of national competition authorities’ decisions. Practically all of the antitrust damage claims registered in the EU are so-called follow-on actions, which are claims following the decision of a competition authority regarding an antitrust infringement. However, the legislation of the majority of the Member States does not recognise such decisions as binding. The Directive determines that once a final decision of a national competition authority of a Member State declares that an infringement has taken place, the infringement shall be seen as irrefutably established for the purposes of an action for damages in this Member State. Moreover, final decisions of national competition authorities of other Member States shall be considered as at least prima facie evidence that an infringement has occurred.
The limitation period for filing a damage claim shall be at least five years. It shall be interrupted or suspended if a competition authority starts an investigation. In order to incentivise out-of-court settlements, the limitation period shall also be suspended for the duration of the consensual dispute resolution process.
The Directive also contributes to the definition and the quantification of harm. Harm shall comprise the actual loss, the loss of profits and interests. It shall be presumed that antitrust infringements cause harm, but the infringer must have the right to rebut this presumption. In cases where it is established that the claimant suffered a harm but it is practically impossible or excessively difficult to quantify the precise amount based on the available evidence, national courts shall be empowered to estimate the damage.
Additionally, the Directive states the principle that only the actual loss at one specific level of the supply chain shall be considered. If the claimant is a direct purchaser who passed on all or part of the overcharge resulting from the antitrust infringement to its customers, the passed-on overcharge does not constitute the claimant’s harm but that of its customers: that is, the indirect purchasers. These purchasers may also initiate a damage action against the infringer to obtain compensation for the passed-on overcharge. The Directive establishes procedural rules that shall be adopted by the Member States concerning the burden of proof in each of these different scenarios.
Once the Directive is formally approved by the Council of Ministers, Member States will have two years to implement its provisions in their legal systems.
Dr Mark C. Hilgard is a partner and head of the German litigation and arbitration practice, Dr Jan Kraayvanger is a partner and Ana Elisa Bruder is a foreign associate at Mayer Brown LLP. Dr Hilgard can be contacted on +49 69 7941 2271 or by email: firstname.lastname@example.org. Dr Kraayvanger can be contacted on +49 69 7941 2271 or by email: email@example.com. Ms Bruder can be contacted on +49 69 7941 2271 or by email: firstname.lastname@example.org.
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Mark C. Hilgard, Jan Kraayvanger and Ana Elisa Bruder
Mayer Brown LLP