Royal Decree Law 9/2017, of 26 May, entered into force in Spain on 27 May 2017, which transposes into Spanish law the EU Directive on damages claims for antitrust offences (see here).
The Royal Decree Law modifies the Spanish Competition Act ("LDC") by including a new Title regarding the compensation for damages caused by breaches of competition rules. The new Title introduces a series of measures related to the binding effect of national competition authority decisions, limitation periods, joint and several liability or the passing on of overcharges.
The Royal Decree Law also modifies the Spanish Civil Procedure Act ("LEC") by including a new Section in Chapter V regarding evidence in damages claims for antitrust offences.
The transposition of the Directive means competition provisions will enjoy private enforcement in Spain. It is hoped that the Royal Decree Law will make it easier to bring claims for damages caused by restrictive practices.
In recent years, the private enforcement of competition rules has been one of the significant unresolved issues from the perspective of European and national law.
The Royal Decree Law transposes into Spanish law Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 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").
This Directive allows anyone who has suffered harm caused by an infringement of the competition rules to claim full compensation for such harm. The Directive provides an equivalent protection throughout the EU for anyone who has suffered harm.
THE ROYAL DECREE LAW THAT TRANSPOSES INTO SPANISH LAW THE EU DIRECTIVE ON DAMAGES CLAIMS FOR ANTITRUST OFFENCES
1. The Royal Decree Law
The aim of the Royal Decree Law is to achieve the private enforcement of competition provisions in Spain, enabling anyone who has suffered harm caused by an infringement of competition rules to effectively exercise the right to claim full compensation for that harm.
We have set out below a summary of the key provisions of the Royal Decree Law.
2. Disclosure of evidence (articles 283 bis a( to 283 bis k) LEC)
The Royal Decree Law introduces a new Section in Chapter V of the LEC, which includes the provisions of the Directive regarding the disclosure of evidence in the context of damages claims for antitrust offences.
These articles address the issue of so-called "asymmetric information" in the context of damages actions brought as a result of infringements of competition provisions. This concept refers to the difficulty of obtaining evidence to prove breaches of competition provisions given that such evidence is usually in the possession of the defendant or other third parties (e.g., the competition authorities).
The Royal Decree Law establishes that courts can order proportionate disclosure of evidence from defendants, claimants, the competition authorities or other third parties provided appropriate measures are put in place to protect confidential information or business secrets. However, the Royal Decree Law provides protection for certain documents in the possession of the competition authorities. In particular, the Royal Decree Law provides protection for the following documents:
- courts cannot at any time order a party or a third party to disclose either leniency statements1 or settlement submissions2
- documents prepared by the parties specifically for the purpose of the public enforcement proceedings (such as replies to requests for information), documents drawn up by the competition authority during the course of its proceedings (such as the Statement of Objections) or settlement submissions that have been withdrawn, may only be required to be disclosed after the competition authority has closed its proceedings
These protective measures also apply in cases where a party has acquired those documents through access to the files of a competition authority.
3. Rebuttable presumption of harm in cartel cases (article 76 LDC)
The Royal Decree Law includes a rebuttable presumption that cartel infringements cause harm. This is intended to help the victims of a cartel to prove the damages caused by such infringement. The presumption can be rebutted by the defendant.
The onus is on the claimant to prove the harm suffered by an infringement of competition rules. Courts are entitled to estimate the amount of harm where it is established that the claimant suffered harm but where it is practically impossible or excessively difficult to quantify that harm on the basis of available evidence.
Spanish competition authorities may, upon request, assist the courts in calculating the quantum of damages.
4. Joint and several liability (article 73 LDC)
The Royal Decree Law states that, where several undertakings infringe competition rules jointly (as in cartel cases), they should be jointly and severally liable for the entire harm caused by the infringement, but they have a right to claim contribution from their co-infringers.
The Royal Decree Law provides for two exceptions to this principle:
- small and medium-sized companies, as defined in Commission Recommendation 2003/361/EC, will only be liable to their own direct and indirect purchasers provided that their market share in the relevant market was below 5% and that them being jointly and severally liable would irretrievably jeopardise their economic viability
- an undertaking which has been granted immunity from fines under a leniency programme will only be liable for damages for harm it caused to its direct or indirect customers or suppliers. The immunity applicant will however remain liable as a last resort debtor if the victims are unable to obtain full compensation from the other infringers
These provisions aim to prevent damage claims being directed only against undertakings which have been granted immunity from fines under a leniency programme, as a result of the reduced incentive to appeal against the infringement decision that these undertakings may have.
5. The passing on defence and indirect purchasers (article 79 LDC)
The Royal Decree Law expressly recognises that a defendant in an action for damages is able to raise the "passing-on"3 defence if the claimant passed on all or part of the overcharge to its customers (so-called indirect purchasers). However, the onus should be on the defendant to prove the passing-on, who must be entitled to claim from the court reasonable disclosure from the claimant or from third parties in this context.
On the other hand, there is a rebuttable presumption that the overcharge was passed on to the indirect purchaser if it is proved that: (i) the defendant committed a competition law infringement; (ii) such infringement resulted in a overcharge for the direct purchaser; and (iii) the indirect purchaser purchased the goods or services that were the object of the infringement or that were derived from or contained such goods or services.
6. Limitation periods (article 74 LDC)
Anyone who has suffered harm caused by an infringement of the competition rules has up to five years to claim full compensation for that harm in court. That limitation period of five years would be suspended if a competition authority is investigating the infringement to which the claim relates. On the other hand, the suspension should end one year after the infringement decision has become final, or after the investigation is otherwise terminated. An infringement decision becomes final when it can no longer be reviewed by an appeal court.
7. Effects on national decisions (article 75 LDC)
A final decision of a Spanish competition authority or by a Spanish review court should be treated as irrefutable evidence of an infringement for the purpose of damage actions.
Final decisions adopted by the competition authorities or courts of another EU Member State qualify as prima facie evidence that an infringement of competition law has occurred.
Entities exposed to or contemplating antitrust damage actions are advised to review the legislation closely to better understand the consequences of the Royal Decree Law and the legal protections from which they may be able to benefit.