This November, the European Union will approve the Directive on certain rules governing actions for damages under national law for infringements of the competition law of the Member States and of the European Union (“the Directive”).
Aiming to harmonize national laws in this field, the Directive’s main purpose is to bolster private damages actions ensuring that public enforcement remains fully effective.
The new legislation will enter into force on the twentieth day following its publication in the Official Journal, leaving Member States two years to enact their respective implementing regulations.
The rules contained in the Directive relate to a number of issues of importance:
- The effect of NCA decisions
- The nature and extent of liability
In order to remedy information asymmetry which typically exists in antitrust proceedings, the Directive provides for the possibility of disclosure of evidence. A “reasoned justification containing reasonably available facts and evidence sufficient to support the plausibility of a claim for damages” will be the appropriate legal standard to obtain a disclosure order from courts.
Disclosure requests will need to be narrow and proportionate. The scope, the confidentiality and the cost of gathering the information requested are important factors for courts to assess before granting such an order.
Leniency corporate statements and settlement submissions will be excluded from disclosure. However, other information collected in administrative proceedings, as well as withdrawn settlement submissions, may be disclosed if the authority has closed the proceedings.
Failure to comply with disclosure obligations may result in penalties such as the possibility to draw adverse inferences.
B) Assessment of Harm
Taking into account the difficulties in calculating damages in this type of actions, the Directive empowers national courts to estimate the harm caused by anticompetitive infringements on the basis of the available evidence. In the case of cartel agreements, claimants will benefit from a rebuttal presumption that they have suffered harm.
THE EFFECT OF NATIONAL COMPETITION AUTHORITY DECISIONS
To ensure the efficiency and effectiveness of damages actions, the Directive establishes that once a decision adopted by a national competition authority has become final, the nature of the infringement as well as its material, personal, temporal and territorial scope should be deemed to be irrefutably established in the Member State in which the decision has been adopted.
If the action is brought in another Member State, the decision will at least constitute prima facie evidence of the infringement.
NATURE AND EXTENT OF LIABILITY
A) Joint and Several Liability
As is already assumed generally to be the case in most Member States, joint and several liability is enshrined as the general rule for joint infringements.
However, as an exception to this general rule, leniency applicants will exclusively be liable with respect to their own sales, unless compensation cannot be fully obtained from the other co-infringers.
Small or medium-sized enterprises will benefit from an additional exception if joint and several liability would jeopardize their viability (unless they led or coerced other undertakings to participate in the infringement or they are repeat offenders).
B) Pass-On Defence and Indirect Purchasers’ Standing
Infringers will be liable for the harm caused to both their direct and indirect purchasers.
With the purpose of avoiding over compensation, the Directive allows infringers to raise the so-called “pass-on” defence. The burden of proof to demonstrate “pass-on” will rest with the infringers. Even if they succeed in establishing the defence, they will still be liable for the profits foregone by their purchasers as a result of the consequential decrease in their volume of sales.
The Commission will issue guidelines for national courts on how to estimate the shares of damage suffered by each level of the supply chain.
The Directive provides for a specific limitation period for competition law damages actions of at least 5 years.
The limitation period shall not begin to run before an infringement ceases and the plaintiff knows, or ought to have known, the following facts: (i) the conduct in question, (ii) its qualification as a competition law infringement, (iii) the damage it has caused; and (iv) the infringer’s identity.
The limitation period may be suspended if a consensual dispute resolution process is initiated or if an authority initiates an investigation. In the latter case, the suspension will, at the earliest, end one year after the authority has closed its proceedings.
In order to promote the extrajudicial settlement of claims, the Directive provides as a general rule that settling infringers will not respond in contribution for the remaining claims of the injured party with whom they have settled. By way of derogation, the settling injured party may claim from the settling infringer the remaining part of the claim if the non-settling co-infringers are not able to provide full compensation unless the terms of the settlement provide otherwise.
In addition, a settlement may be taken into account as a mitigating factor when assessing fines in the related administrative proceedings if the settlement is reached before a competition authority has issued its decision.