Part 3: Cartel damage claims
On January 17, 2017 British Prime Minister Theresa May outlined for the first time her plan for leaving the EU. Indicating a “hard Brexit”, May explained that the UK (i) will leave the EU single market and (ii) will neither be bound by EU rules nor by decisions of the European Court of Justice. In consequence, the UK would have to leave the European Economic Area (EEA) after Brexit, too.
Even though the British Supreme Court decided on January 24 that Parliament has to authorise Brexit, a “hard Brexit” is still a likely scenario.
A “hard Brexit” would have an impact on European law enforcement and in particular on European competition law. Although most of the problems arising could be resolved by bilateral agreements between the UK and the EU, it is unclear if the UK will adopt this approach.
Against this background, we summarize the probable (as it stands now) main changes in competition law after Brexit and the corresponding risks and chances for business in three newsletters.
While our first two newsletters dealt with merger law and competition law enforcement, the third and last newsletter covers cartel damage claims – in particular the impact on forum shopping.
- In recent years, the UK has become a popular forum to sue cartelists for cartel damages suffered throughout the EU due to its wide-ranging pre-trial discovery and class-actions. There are several factors which could render lawsuits in the UK less attractive to claimants after Brexit, in particular:
- Even though we expect the UK legislator to implement the EU cartel damage directive (2014/104/EU) within the next few months, it is very likely that decisions of the European Commission and the Member States’ competition authorities / courts will not have any binding effect for UK courts after Brexit. In consequence, claimants in the UK could no longer rely on the Commission’s or the Member States’ competition authorities’ / courts’ decisions as a binding proof of a breach of competition law.
- The Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments will no longer apply under UK civil law. This means in particular that it is unclear – and depends on future UK law – whether it will be possible to sue cartelists in the UK for damages incurred outside the UK only.
- On the other hand, under the EU cartel damage directive – and therefore before the national courts of the EU Member States – leniency applications and settlement submissions will be privileged and will not have to be disclosed in discovery. By abolishing this privilege, UK law could provide for a broader disclosure which will be an advantage for claimants.