The Department for Business, Innovation and Skills (BIS) has published a consultation on the implementation of the Damages Directive (the Directive) in the UK. Whilst implementation in the UK requires only minor changes to the current regime, the measures further reinforce the desire of the UK Government to make the UK - and specifically the Competition Appeal Tribunal (the CAT) - “a major venue” in the EU for seeking redress for breaches of both EU and UK competition law.

The Damages Directive

The Directive entered into force on 27 December 2014 and aims to make it easier for citizens and companies to pursue damages claims for breaches of EU competition law before their national courts. It also seeks to harmonise the rules governing damages actions across Member States. Our article on the main changes brought about the Directive is available here.

Many of the requirements in the Directive already exist in UK law. For example, the Consumer Rights Act 2015 (CRA) recently extended the limitation period for private competition actions from two years to six years in England, Wales and Northern Ireland, and five years in Scotland (see our article on the CRA here). However, some of the requirements will require changes to existing UK regime and BIS is seeking views on the Government’s proposed approach to these changes.

Consultation on implementation

We summarise below the main changes on which BIS is seeking views:

  • Single/dual regime: The UK and EU competition law regimes are very similar and often applied simultaneously in the UK. However, there are circumstances in which only one regime will apply, depending on where the impact of the anti-competitive behaviour is felt. If the UK Government were simply to ‘copy-out’ the Directive, this would result in a two-tier system, with one procedure for UK cases and another for EU cases. This has the potential to create uncertainty, confusion and higher costs for businesses. BIS therefore proposes to implement the Directive as a single regime, which would mean applying one set of procedures regardless of whether UK or EU law applies.
  • Limitation periods: The Directive requires that limitation periods shall only start when the competition law infringement has stopped and the claimant knows (or can reasonably be expected to know) of the behaviour, the fact of the infringement, the identity or the infringer and the harm caused. It also provides that the limitation period can be suspended in certain circumstances. UK law does not currently explicitly require claimants to have all of this required knowledge, nor does it provide for suspension. BIS proposes that UK legislation should mirror the Directive in these respects.  
  • Disclosure: The Directive provides that national courts should be able to require defendants or third parties (including competition authorities) to disclose certain information, with a view to increasing the evidence available to claimants. The UK courts already generally order broad access to documents. However, the Directive also defines certain categories of documents that shouldnot be disclosed, including leniency documents. BIS proposes to provide for statutory protection for leniency documents, which will likely require amending the Civil Procedure Rules.  
  • Passing on: The Directive codifies the ‘passing on’ defence, whereby a defendant may show that a claimant has offset an overcharge resulting from the defendant’s infringement by passing it on to its own customers. The defendant bears the burden of showing that the claimant has suffered no loss as a result of passing-on. BIS proposes explicitly to provide for this defence by way of an amendment to the Competition Act 1998.
  • Implementation date: Member States have until 27 December 2016 to implement the Directive but BIS is seeking views on implementing the Directive earlier - on 1 October 2016. The rationale is that many regulations will be introduced on this date and it will therefore be easier for businesses to familiarise themselves with the competition law changes at that time.

Next steps

Although implementation of the Directive in the UK will require very few changes to the current regime, these changes help further to clarify certain procedural aspects of bringing private actions in the UK. In doing so, they reinforce the desire of the UK Government to make the UK - and specifically the CAT - “a major venue” in the EU for seeking redress for breaches of competition law.

Responses to the consultation can be made online and must be received by 9 March 2016. BIS will then publish a consultation response by mid-June 2016, setting out the decisions it has made in light of the consultation, and a summary of the views expressed.

The text of the consultation is available here.