With the introduction of the Competition Damages Directive (Directive 2014/104/EU, the “Directive”) any victim – be it a citizen or a company – can now claim compensation if they are harmed by third party infringements of EU competition rules. The Directive bolsters enforcement of EU competition law by introducing the notion of private enforcement whereby victims of anti-competitive behaviour are given a main role in enforcing the competition prohibitions and claiming compensation for competition infringements. Through the harmonisation of such a procedure, litigation to recover losses will become a realistic option for smaller companies, SMEs and consumers.

This Directive was transposed into Maltese law by means of Act XXV of 2017, referred to as the “Competition Law Infringements (Action for Damages Regulations)”. The transposition of the Directive has helped raise awareness of the possibility for any natural or legal person, who suffered harm caused by an infringement of competition law, to claim and obtain full compensation for that harm.

In a nutshell

How does it work?

The process begins with a finding of an infringement of competition law, either on the basis of the prohibited practices carried out by a cartel or of an abuse of a dominant position by undertaking concerned. Until the introduction of the Directive, after a breach of competition law was found, fines would be imposed by national competition authorities on the undertakings found to be in breach, and the buck would stop there. Now however, any third-party victim who has suffered losses due to the anti-competitive behaviour of these undertakings may sue for damages in court. They may submit the judgment or decision of infringement as evidence in Court to claim damages for losses they suffered.

By way of example, in the Finnish Skanska case, a cartel infringement was found to exist when a number of companies fixed prices and allocated contracts for the supply of asphalt. The Finnish Supreme Court fined a number of companies, even successor companies, including Skanska Industrial Solutions, NCC Industry and Asfaltmix, for the involvement of their predecessors in the cartel. That ended the competition administrative proceedings.

Separately to the above, the Finnish city of Vantaa brought a separate suit for damages against those same companies for the losses that it had suffered as a result of overcharges in its asphalt contracts. The District Court at first instance ordered the three companies to pay damages to the complainant victim, over and above the administrative fines already paid to the national authority.

Instituting a claim

The procedure fine-tunes the interplay between private damages claims and public enforcement. As mentioned above, a final infringement decision of a national competition authority will constitute full proof before civil courts in the same Member State that the infringement occurred, and prima facie proof in courts of other Member States. This therefore creates the right of action under the Directive.

What can you claim?

Victims have a right to claim compensation for actual loss, and for loss of profit, as well as the payment of interest from the time the damage occurred, until the capital sum awarded is actually paid.

Reversal of burden of proof

Remarkably, the Directive creates a rebuttable presumption that cartel infringements cause harm. A cartel is defined as an agreement or concerted practice between two or more competitors, with the aim of coordinating their competitive behaviour in the market or influencing the relevant parameters of competition. The rebuttable presumption is particularly beneficial for those who are victims of anti-competitive behaviour through being indirect customers, i.e. where the direct customer of an infringer offsets the increase of prices raised by the infringer, by charging the increase to their own customers.

Several courts of various Member States have adopted a low standard of proof in relation to assessing the causal link between the harm and the result from an anticompetitive practice. This means that, even where the evidence adduced is minimal, a court may still establish the infringer’s liability.[1] Notwithstanding, cause and effect may vary, depending on various factors, such as the number of market players, the number of cartelists, the possibility of information exchange, the market coverage of the cartel and the level of cartel discipline etc.

Easier access to evidence

Evidence is a crucial element for a successful action. Due to the technically complex nature of most competition law infringements, the Directive introduces the possibility to order companies to disclose evidence when victims claim compensation, wherein victims are able to ask for disclosure of categories of evidence.

Time to bring action

Victims will have at least five years to bring damages claims, starting from the moment when they were able to discover that they suffered harm from an infringement. The five years must not start until the claimant knows or can reasonably be expected to know the identity of the infringer and other relevant facts and must be suspended until at least one year after the infringement decision has become final.