A new EU Directive governing the procedure for recovering damages for infringements of competition law has been adopted. The Directive aims to help victims of antitrust infringements (such as cartels or the abuse of a dominant market position) claim compensation by creating a common framework to overcome legal uncertainty and obstacles that have discouraged private actions.
The key elements of the Directive are:
- Victims will have a minimum of five years to bring a claim which period may be suspended during an investigation or proceedings by a national competition authority.
- The final decision of a national competition authority will be binding evidence of infringement before the national courts.
- Victims may take a claim against any or all of the infringing parties, each of which are bound to compensate for the harm in full.
- Purchasers may be able to claim compensation for an infringement which caused price increases to be passed along the distribution chain on to them, unless they in turn passed on the price increases (known as the “passing-on” defence).
- Out-of-court settlements have been encouraged: for example, the limitation period for bringing a claim must be suspended for the duration of settlement negotiations.
The Directive also aims to clarify the relationship between private damages actions and public enforcement by competition authorities. A number of safeguards have been put in place to preserve the role of competition authorities in investigating and sanctioning infringements. Most particularly, the Directive protects companies’ incentives to co-operate with competition authorities by way of leniency programmes and case settlements, for example by ensuring that statements made in those contexts are not disclosed for the purpose of actions for damages.
The Directive will enter into force on Christmas Day, 25 December 2014, and must be implemented into national law within two years.
In Ireland, private damages actions have, to date, been very rare. Following the implementation of the Directive, greater legal certainty will hopefully encourage litigants to defend their competition law rights and seek full compensation where they have been victims of illegal behaviour.