Consumers are often directly or indirectly affected by the consequences of anti-competitive practices such as cartels or abuses of dominant position through the imposition of higher prices, limited choices, the lack of entry of new operators into the market, and the reduction of incentives for research and innovation.
Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit anti-competitive agreements and abuses of a dominant position. The European Commission, together with National Competition Authorities, is responsible for enforcing those prohibitions.
Private enforcement of the EU competition rules, on the other hand, refers to legal actions brought by private individuals or businesses before national courts to enforce the rights derived from these rules, including the right to be compensated for harm resulting from an antitrust infringement.
The Court of Justice in Courage (1) and Manfredi (2) stated that, as a matter of EU law, any individual must be able to claim compensation for such harm. However, according to the Commission, there appears to be a lack of appropriate national rules governing actions for damages and, even where such rules exist, there are significant divergences among the national laws of the relevant Member States, resulting in an uneven playing field in this area.
This article examines the proposed Directive which aims to deal with some of the difficulties encountered in the area.
Provisions of the Proposed Directive
Providing incentives for private litigants to bring damages actions and deterring potential infringers from future violations, while still protecting the fundamental due process rights of all litigants is not an easy task. The Directive 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 (3) therefore aims at removing practical obstacles to compensation for all victims of infringements of EU competition law.
Under the terms of the proposed Directive:
- National courts can order companies to disclose evidence when victims claim compensation. The courts will ensure that such disclosure orders are proportionate and that confidential information is duly protected.
- Victims will have at least one year to claim damages once an infringement decision by a competition authority has become final.
- If an infringement has caused price increases and these have been "passed on" along the distribution chain, those who suffered the harm in the end will be the ones entitled to claim compensation.
- The Directive establishes a rebuttable presumption that cartels cause harm. In combination with the power of national courts to estimate the amount of harm, this will help victims in the often difficult task of proving and quantifying the harm they have suffered.
Probative Effect of National Decisions
Pursuant to Article 16(1) of Regulation No 1/2003, a Commission decision relating to proceedings under Article 101 or 102 of the Treaty has a probative effect in subsequent actions for damages, and the Otis (4) case confirmed that a national court cannot take a decision running counter to any such Commission decision. The Commission has decided that it is appropriate to give decisions made by national competition authorities (or national review courts) similar effect. The thinking is that requiring a private litigant to re-litigate the same issues in subsequent damages actions is inefficient, causes legal uncertainty and thereby leads to unnecessary costs for all parties.
Therefore, a final decision of a national competition authority finding an infringement will automatically constitute proof before courts of the same Member State in which the infringement occurred. However, the proposed rule only concerns decisions that are "final" and this represents a concept which will need to be clarified further.
Alternative Dispute Resolution (ADR)
The Directive also encourages willing parties to use consensual dispute resolution as it can sometimes be a more efficient and less costly way to settle disputes and obtain compensation. It provides for the suspension of limitation periods/pending court proceedings to allow parties sufficient time to reach a consensual settlement, without the risk of losing procedural rights in the meantime. The use of competition law principles in an ADR context has been a controversial development in competition law circles because it leads to an unprecedented level of privatisation of competition principles. However, it is largely welcomed in business circles as ADR is widely seen as being a more efficient and manageable route compared to the traditional court setting, so this move should be welcomed.
Private actions for damages can become an integral part of the European competition law enforcement regime and, if structured properly, can advance the goals of competition law and consumer welfare.
The agreed text of the Directive has been sent to the EU Council of Ministers for final approval. Once the Directive is adopted, Member States will have two years to implement the provisions of the Directive in their national legal systems.