The current state of play
In Copenhagen, only six years ago, the world ignored the European Union’s call to The deadline to implement the EU antitrust damages Directive (the “Damages Directive”) expires on 27 December 2016. Many member States have already launched or completed public consultations (Finland, Denmark, the Netherlands, Sweden, Norway, Latvia, the United Kingdom and Lithuania) or proposed implementing measures (Spain and Poland). The purpose of this note is to give a brief overview of the various options for implementation of the Damages Directive currently under discussion.
- Single or dual regime
The UK Government launched a public consultation in January 2016. It addresses a fundamental policy option. Should the UK implement a separate regime for breaches of European competition law (including where European competition law is applied in parallel with UK competition law) to stand alongside the damages regime for cases under UK competition law (“dual regime”). Or should the UK apply the changes required by the Damages Directive to cases brought as a result of breaches of either European or UK law (or both) (“single regime”). The UK Government notes that where it to copy and paste the Damages Directive the result would be the adoption of a dual regime. In fact the Damages Directive only applies to cases where EU law has been applied (i.e. in instances where either EU, or both EU and domestic law are applied) and not when only domestic law is applied. It is clear from the public consultation that the UK Government is proposing the introduction of a single regime, in order to avoid uncertainty and the possibility of litigation between parties as to which regime applies. This is an issue well known in Italy where, until 2012, Court of Appeals had jurisdiction to hear claims for damages resulting from breaches of domestic competition law, while the Tribunals (the lower court) those claims based on EU law as set out in Articles 101-102, TFUE (25). It was not uncommon for this dual regime to be exploited by defendants to slow down the damages actions by challenging the choice of Court made by the claimants.
It is difficult to find any justification for the adoption of a dual regime. And yet the the Ministry of Employment and the Economy of Finland on 16 June 2015 seem to favour the dual approach when it published a working group report where it proposes that the Damages Directive will be implemented through a special Act on antitrust damages. The Act is proposed to be based on a dual regime and therefore to apply to damages actions related to Articles 101-102, TFUE and Sections 5 and 7 of the Finnish Competition Act regardless of whether the infringement has an effect on trade between Member States.
Spain intends to go even further: on 11 January 2016 the Spanish Ministry of Justice published a Legislative proposal drafted by the Special Section of the General Codification Commission on the implementation of Damages Directive proposing to apply the new regulation not only to claims arising from EU and domestic provisions prohibiting restrictive agreements and abuse of dominant position, but also to claims for damages arising from the distortion of competition through acts involving unfair competition.
The UK public consultation does not mention the issue of overcompensation expressly prohibited by Article 3.3 of the Damages Directive, despite the finding of the Competition Appeal Tribunal in Albion Water and Cardiff Bus that exemplary damages may be available in actions for the infringement of competition law. The issue is expressly dealt in the proposal for an act implementing the Damages Directive published by the Dutch Ministers of Justice and Economy Affairs, where it is stated that the prevention of overcompensation is already sufficiently safeguarded by the existing law. It is likely that the same conclusion will be reached by most Continental jurisdictions.
- Rules on disclosure
As expected, the UK consultation document states that the rules on disclosure set out in the Damages Directive does not require substantial changes. Indeed, English law already allows wider disclosure than required by the Damages Directive. The only change foreseen will be the introduction of protection for leniency documents.
Continental Member States will, on the other hand, require amendments to address this issue and possibly entirely new sets of rules specifically dedicated to disclosure. The most advanced and audacious proposal on disclosure is seen in Spain which proposes a completely new set of rules on access to evidence to be inserted in the Civil Procedure Act. Some of these rules will be applicable to all civil litigation. This confirms the prediction of some commentators that the impact of the Damages Directive is not limited to antitrust actions. Indeed, it could become difficult to justify the situation that wider disclosure is on available for antitrust damages actions particularly if it is denied to other violations fo the law that are equally or more serious (e.g., environmental pollution, securities fraud, consumer product safety).
- Effect of national decisions
The most interesting provision contained in the Spanish proposal is that not only the final decisions of the Spanish competition authority shall be considered to establish irrefutably the existence of an infringement of competition law, but also those decisions issued by the national competition authorities of other Member States. Article 9 of the Damages Directive, on the other hand, provides that national antitrust infringement decisions in courts of other Member States constitute "at least prima facie evidence" of the infringement, and not an irrefutable proof of breach. The Spanish proposal essentially reproduces Article 9 of the draft of the Damages Directive published by the European Commission on 11 June 2013 and not the final version of Article 9 found in the Directive. During the legislative process many Member States refused to accept the idea of the binding effect of the decisions adopted by national antitrust authorities of other States.
- Parental liability
The Spanish proposal aims to introduce a form of parental liability already existing in the administrative procedure according to which parent companies may be responsible for the damages caused by their subsidiaries. The Finnish working group report is proposing that the purchaser of a business shall be liable for the antitrust infringements of that business if it was, or should have been, aware of the infringement at the time of the acquisition. This is an idea not provided for in the Damages Directive, which is limited to ensuring the full compensation of victims.
- Limitation periods
One important area of harmonisation of the rules across the Member States relates to limitation periods. In this respect, Article 10 of the Damages Directive requires that limitation periods: (i) shall only start when the breach of competition law has stopped and the claimant knows or can be reasonably be expected to know of the behaviour and the fact it constitutes an infringement of competition law, the fact the infringement caused harm and the identity of the infringer; (ii) shall be at least 5 years; and (iii) can be suspended in various circumstances, including in order to allow a competition authority to investigate the breach of competition law.
From the examination of the various public consultations/proposal it seems that most Member States intend, in essence, to copy into domestic law the provisions of the Directive on limitation periods. This seems the correct approach particularly as differences in approach could encourage forum shopping.
The implementation of the Damages Directive is certainly a complex exercise. The decision to launch public consultations in those Member States that have chosen to do so should be welcome, since it encourages a wide debate that could favour a correct implementation of the Damages Directive particularly where the Directive leaves discretion to the Member States.
On the basis of our first analysis of the on-going consultations, it seems that, except for limitation periods, the Member States do not intend to follow the usual approach to the implementation of Directives, namely to copy them into national law as far as possible. This was to be expected give the significant differences in national law procedures and approaches to the whole issue of damages. It seems for the moment that the EU is not likely to end up with a standardised approach.