Under existing EU legislation, if there is a causal relationship between harm suffered and an infringement of competition rules (eg, a prohibited anti-competitive agreement or abuse of a dominant position), any individual is entitled to claim compensation for such harm.(1) However, potential claimants have remained rather sceptical of bringing antitrust damages actions so far, due to a diversity of national rules governing such actions, insufficient case law and a non-existent legal framework regulating the interaction between public and private enforcement. This may change with the adoption of a proposed EU directive on actions for damages for infringements of competition law.
The directive proposed by the European Commission aims to balance the interaction between public and private enforcement of competition law and provide for the compensation of harm suffered by victims of infringements of competition law. The directive will be adopted by May 2014, following which member states will have two years in which to implement it into their national legislation.
At present, the public enforcement of competition law is ensured by the European Commission and the Czech Competition Authority, both of which have the power to impose fines on undertakings that have infringed competition rules. However, public enforcement has neither the capacity nor the tools to allow for the compensation of victims for harm caused by such infringements. Instead, that is the main objective of private enforcement.
Individuals' rights and obligations are enforced by the national courts. If there is a causal relationship between the harm suffered and an infringement of competition rules, any individual is entitled to claim compensation for such harm. Compensation will reflect:
- the actual suffered loss;
- the loss of profit incurred; and
- respective interest.(2)
Case law in the Czech Republic has developed towards an effective private enforcement system, with recent rulings of the courts on the disclosure of evidence from the Competition Authority confirming third-party access to administrative files. Despite those decisions, the authority's practice has actually remained the same and third parties have not been allowed to access administrative files for various reasons.
Few actions for damages have been filed for infringements of competition law (ie, alleged abuse of a dominant position). Although a recent decision on abuse of dominant position has not yet been issued (the authority's administrative proceedings are not yet finished), both claimants have submitted their actions with calculation of their damages. The public is awaiting judgment in this case expectantly.
While the proposed directive has the potential to improve private enforcement in the Czech Republic, there may be several issues to overcome, particularly due to local procedural rules applied before the Czech courts. The most significant issues are as follows.
Under the proposed directive, the disclosure rules between parties will improve the position of claimants in terms of gaining access to evidence. This is especially important for follow-on actions (ie, those brought after the Competition Authority has issued a final infringement decision), as documents contained in authority's files will not be exempt completely from disclosure. It will be for the court to examine only the proportionality of the request for disclosure of information. As the proposed directive sets guidelines for the examination of proportionality, there will be a degree of certainty for claimants to assess the possibility of the success of their request. The authority is already obliged to disclose the administrative file to third parties when they fulfil specific requirements and the court is entitled to order the authority to disclose administrative files. However, in practice, the authority has not found any case eligible for such disclosure.
The proposed liability limitation for immunity recipients is not absolute. Recipients will remain liable for harm that they caused to their own direct or indirect purchasers or providers. Recipients will also remain liable as a last-resort debtor, with regard to the contribution owed to their co-infringers under joint and several liability. If injured parties are unable to obtain full compensation from other infringers, the immunity recipient will remain fully liable. Therefore, a victim's right to full compensation will remain unchanged. The principle of joint and severe liability does not exist in the Czech law system without any further interchange between the particular infringer and a specific damage claim. Even if implemented into the Competition Act, the actual process of evidence will be complicated.
The proposed directive eliminates the risk for victims' claims being time-barred because of lengthy investigations conducted by the European Commission or the Czech Competition Authority. The success of an action for damages will be increased by the possibility of waiting for the authority to close proceedings and issue an infringement decision, which would serve as evidence for the infringement's existence. In addition, under the proposed rules for disclosure, victims will gain access to documents on which the temporary protection would no longer apply.
The burden of proof regarding the passing on of extra costs caused by infringing behaviour to following customers will rest with the infringer and will improve the position of final (indirect) customers.
Rebuttable presumption that harm was caused
Under the proposed directive, courts will be entitled to estimate the amount of damages.
Binding decision of Competition Authority
Under the proposed directive, courts will be bound by the final decision of the Competition Authority on anti-competitive infringement. The binding decision must be in force. However, the Constitution states that it is up to the courts to decide whether the authority's decision is relevant for judgment in a damage claim case. Moreover, assuming his or her rights were breached by a decision of any administrative authority, everyone (including infringers) is entitled to have such decision reviewed by a court as an independent institution. Making an authority decision binding is therefore impossible with regard to this constitutional right.
Other changes introduced by the proposed directive will be difficult to implement into the respective Czech legislation, since the legal system comprises both substantive and procedural law. The Czech system differs substantially from common law and will require extensive legislative amendments to bridge the gap. However, until the directive enters into force, potential claimants can still bring their actions before the courts in other member states (eg, the United Kingdom, Germany or the Netherlands) where the legal system is suitable for effective private enforcement.
For further information on this topic please contact Jitka Linhartová or Claudia Bock at Schoenherr by telephone (+420 225 996 500), fax (+420 225 996 555) or email (firstname.lastname@example.org or email@example.com). The Schoenherr website can be accessed at www.schoenherr.eu.