On the 9 March 2017, the UK Regulations on competition law claims and damages ("the Regulations") came into force. The Regulations implement the EU Directive 2014/104/EU on damages for competition law infringements ("the Directive") which was due to be implemented by 27 December 2016. The Directive introduces a minimum standard for competition law damages actions across EU member states. It aims to enable those who have suffered loss to obtain full compensation.

Changes made by the Regulations

The Regulations, which apply to claims arising from the infringement of both UK and EU competition law, make the following key changes:

Substantive changes

  • Passing on – the Regulations clarify that the defendant has the burden of proof if it wishes to claim that the claimant passed on the overcharge resulting from the infringement to its own customers. Find out more about the passing on defence.
  • Presumption of harm by cartels – the Regulations introduce a presumption that a cartel causes loss or damage. This seeks to alleviate the evidentiary burden on claimants in bringing proceedings.
  • Liability for SMEs and immunity recipients – an SME’s liability for damages will be limited to direct and indirect purchasers of the product or service that was the object of the competition law infringement if its market share was below 5% and the normal rules on liability for damages would jeopardise its economic viability. Liability is also limited to direct and indirect purchasers for immunity recipients, although only if full compensation can be obtained elsewhere. In all other instances liability for cartel participants is joint and several.
  • Exemplary damages – exemplary or punitive damages are no longer available in competition law cases. This marks a change from the previous position under English and Welsh law where exemplary damages were available in limited circumstances.
  • Limitation periods – the limitation period for bringing a claim in England and Wales is six years from the date on which the competition law infringement ceases and the claimant could reasonably be expected to know about the infringement. Under the Regulations the limitation period is now suspended during the investigation of an infringement by a competition authority and during consensual dispute resolution. This is intended to prevent the expiry of limitation periods while potential claimants are waiting to see the outcome of any appeals against the decision.

Procedural changes

  • Disclosure – leniency applications and settlement statements are not available for disclosure. This facilitates public enforcement by encouraging businesses to self-report infringements. If these were available for disclosure it would disadvantage these applicants compared to other cartel participants. Find out more in our briefing on leniency applicants and the end of exemplary damages.
  • Transitional provisions – the substantive rules do not have retrospective effect so will only apply to infringements started (and therefore harm suffered) on or after 9 March 2017. However, the procedural rules will apply to all proceedings before a court or tribunal that start after 9 March 2017 even if the harm was suffered before this date.

What impact will the changes have?

The Regulations provide for substantial changes to the private enforcement of damages in the UK and add to the changes made by the Consumer Rights Act 2015 which allowed stand-alone claims to be brought before the Competition Appeal Tribunal. It is likely to be some time before the substantive Regulations will have an impact because they only apply to loss or damage on or after 9 March 2017 and, by that stage, there may be further changes resulting from Brexit.

Further reading

The Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (PDF)