The European Commission recently adopted a proposal for a Directive designed to encourage companies and individuals claiming damages for loss and damage suffered as a result of anti-competitive behavior under the EU competition rules particularly in cartel and abuse of a dominance cases.

Of particular importance is the fact that an adverse ruling of the EU Commission or national regulator decision will become proof of violation of competition law for private parties in the Courts

Brussels has long debated the terms of any proposed legislation to encourage private actions. With many different legal systems across the 28-member Community, companies and individuals seeking redress often encounter a number of significant difficulties in obtaining damages for the losses they have suffered. Member States’ differing rules on disclosure of evidence, limitation periods, recognition of regulators’ decisions on liability and differing ways of treating “passing on” issues have raised substantial obstacles. The draft EU legislation seeks to address these concerns.

The draft Directive proposes the following measures:

  • Disclosure: National courts will have the power to order companies to disclose evidence when victims claim compensation.
  • Liability: Decisions of national competition authorities finding an infringement will automatically constitute proof before the national courts of all Member States that an infringement has occurred.
  • Limitation Periods: Rules on limitation periods will be clarified so that the period of time within which victims can bring an action for damages will be clearer. In particular this will ensure that victims can effectively claim damages once an infringement has been found by a competition regulator.
  • Passing On: The liability rules in cases where price increases due to an infringement are passed on along the distribution/ supply chain will be clarified. Hopefully this should mean that those who have suffered harm in the end will be the ones who actually receive the compensation. However the devil is in the detail and this will be a particularly difficult area to find a workable solution.
  • Collective Settlements: Rules to facilitate consensual collective settlements will be put in place to allow for a faster and less costly resolution of disputes.

As part of a package of measures the Commission has also adopted a Recommendation encouraging Member States to set up collective redress mechanisms in order to improve access to justice for victims of violations of EU law in general including the competition law rules. In addition it has also adopted a Communication on quantifying antitrust harm to provide guidance to Courts and parties in damages actions. These documents are not legally binding but are providing for guidance purposes.