Spain recently released draft legislation to implement the EU’s Directive regarding damages in private competition litigation. Spain’s legislation goes beyond what was strictly required by the Directive in relation to the ability of claimants use of regulatory determinations in follow-on litigation.

Spain joins seven other member states who have commenced the implementation process, including the UK, Sweden, and the Netherlands.

Background to the EU’s Directive

In November 2014, the European Parliament issued a Directive in relation to actions for damages arising from breaches of competition law.

The Directive is intended to harmonise and simplify compensation claims in national courts arising from infringements of competition law, and provide a mechanism for dealing with evidence and findings in courts of other member states. As a result, the Directive addresses a number of matters relevant to damages claims, including:

  • Discovery: National courts will be able to order the disclosure of evidence by parties to the proceedings or third parties (including public authorities), provided that any applications for such disclosure are not fishing expeditions. Although such disclosure may extend to a competition authority’s file and confidential information (provided that appropriate protection measures are taken), it does not extend to settlement submissions, privileged documents, or statements made in the course of immunity or leniency applications.
  • Joint and several liability: Companies that breach competition law through joint conduct will be jointly and severally liable for damage caused by each other, which is of particular significance in cartel proceedings. While this is consistent with the position in countries like the UK (and Australia), other states such as the US maintain separate liability of cartelists. One of the two exceptions to this provision is where one of the companies has been granted amnesty.
  • Evidence of infringements: Each member state will be required to ensure that determinations by their competition authorities constitute irrefutable evidence of an infringement in follow-on damages proceedings before that state’s courts.
  • Presumptions: There will be a rebuttable presumption that the relevant infringement of competition law caused harm. As a result, it will be up to the defendants to prove that their conduct did not cause any harm.
  • Limitation periods: The limitation period will be extended to at least five years, from the time the claimant knows (or can reasonably be expected to know) of the conduct, and the fact that the conduct infringes competition law and caused harm. However, the limitation period cannot commence before the relevant conduct ceases.
  • Full compensation: Member states will be required to ensure that anyone who has suffered harm is able to claim and obtain full compensation.
  • Assessment of damages: National courts will be empowered to estimate the amount of harm suffered where it is excessively difficult for such harm to be quantified.

The Directive is binding on member states, who have until 27 December 2016 to implement its provisions. It is not, however, binding on the European Commission.

Spain’s implementation of the Directive

Spain’s proposed legislation reproduces the Directive in near-identical form, however, it adds additional elements:

  • head companies will be expressly responsible for conduct of their controlled subsidiaries; and
  • the types of claims covered by the legislation will include unfair competition.

In addition, and most significantly, the proposed legislation provides that a final decision of another member state’s competition authority (or other competent jurisdictional body) will be taken as undisputed evidence of an infringement of competition law in proceedings before another member state’s national courts. This means that, for example, a determination of infringement by the German authority could be used as irrefutable evidence of an infringement in follow-on damages proceedings in France.

This differs from the Directive, which states that such determinations will only be prima facie evidence of an infringement in another member state’s courts.

Similarities to Australia

The EU approach in requiring previous determinations to stand as ‘irrefutable evidence’ of contravention is in contrast to the Australian position in relation to the use of evidence from proceedings commenced by the regulator in follow-on litigation.

In Australia, section 83 of the Competition and Consumer Act 2010 (Cth) provides that findings of fact in previous proceedings (including in relation to cartel conduct) may only be used as prima facie evidence of that fact in subsequent damages proceedings. Given this is a rebuttable presumption, it presents a hurdle for litigants in Australia, as they may nonetheless be required to lead evidence to prove there was an infringement.

Section 83 raises further difficulties, as it remains unclear whether it extends to admissions of fact made by respondents in proceedings that have been settled and approved by the court. That is, do facts admitted as part of a settlement constitute findings of fact by a court?

In response to that question, the Harper Review’s final Report recommended that section 83 be amended to also extend to admissions of fact by a respondent. The Federal Government has since announced that it supports this recommendation and will proceed to develop exposure draft legislation.