The Background: Belgium recently (and belatedly) adopted a Law transposing the EU directive on private antitrust damages.
The Result: The recently adopted Law aims at facilitating damage claims by parties harmed by competition law infringements. It brings Belgium into line with other EU countries that have already implemented the Directive.
Looking Ahead: The Law is expected to boost private competition law enforcement in Belgium and should enhance the full effectiveness of EU and Belgian competition rules. Still, some thorny issues remain open, such as damage quantification.
On June 6, 2017, Belgium adopted legislation ("Law") transposing the EU directive on private antitrust damages (Directive 2014/104, ("Directive")). The Law became applicable on June 22, 2017, and is expected to boost private competition law enforcement in Belgium and should enhance the full effectiveness of EU and Belgian competition rules.
The Directive, adopted on November 26, 2014, should have been implemented by December 27, 2016. Belgium is thus one of the last EU countries to transpose the Directive into national law, following Member States such as France, Italy, and the United Kingdom.
Private enforcement actions before Belgian courts have remained limited so far, notwithstanding some high-profile cases in the telecom, energy, and elevator sectors. The Law should encourage more damage claims, in particular by alleviating claimants' burden of proof and facilitating access to evidence.
Bringing a successful damage claim, even for clear-cut cartel infringements, has proven difficult in Belgium. This is illustrated by the failure of the European Commission (representing the EU institutions) and the Belgian State to obtain damages in their respective follow-on damage actions to the European Commission's 2007 Kone decision. In Kone, the Commission, in its capacity as competition law enforcer, found that several elevator companies had rigged bids for maintenance contracts. The Brussels Commercial Court rejected the damage claims, finding that the claimants had failed to prove to the requisite standard that the infringement had caused actual harm. The judgments are now under appeal, but the claimants will not benefit from the new procedural rules introduced by the Law, as these are applicable only for cases introduced after December 26, 2014.
Right to Full Compensation for Harm Caused by Competition Law Infringements
Reflecting the Directive, the Law recognizes the right of individuals to full compensation for harms caused by competition law infringements, including compensation for actual loss, loss of profit, and interest on damage amounts. Multiple or punitive damages, however, are not allowed, since overcompensation is expressly ruled out. The right to full compensation is applicable to damages arising both from (i) anticompetitive agreements and concerted practices and (ii) abuses of dominance, whether under EU or Belgian competition law.
Alleviating the Burden of Proof for Infringements
The Law eases the burden of proof for injured parties by introducing several presumptions:
First, the Law introduces an irrefutable presumption that a final decision finding an infringement, issued by the Belgian Competition Authority ("BCA") or the Market Court (a division of the Brussels Court of Appeal, which hears appeals against BCA decisions) constitutes evidence of fault in a follow-on damages action. However, infringement decisions by competition authorities from other EU Member States constitute only prima facie evidence of wrongdoing. The Law does not mention decisions of the European Commission (or of the EU courts in appeals of Commission decisions). Still, national courts cannot issue decisions that would run counter to such decisions under Article 16 of Regulation 1/2003. In the elevator cartel cases, the Belgian court accepted that it was bound by the Commission's decision as regards the existence of an infringement (and therefore a fault).
Second, the Law introduces a rebuttable presumption that cartel infringements cause harm. The Law extends the scope of this presumption foreseen in the Directive to cover not only cartels between competitors but also hub and spoke cartels. However it does not extend it as far as to include abuse of dominance cases. The rebuttable presumption should remove some burden of proof difficulties, such as in the above-referred elevator cases, where the Belgian court considered that the Commission's infringement decision as such did not prove that the tendering authorities had been overcharged. In this respect, an economic study commissioned by the European Commission had concluded that cartels lead very often, but not always, to a price mark-up. The Belgian courts must now presume that there is at least some damage (unless the infringer can refute this), but the presumption leaves unaddressed the knotty issue of the quantification of the damage. The Law provides that the court may seek the assistance of the competition authority for the quantification of the amount of the damages, but it is not obvious how a competition authority could provide meaningful assistance in this. In practice, courts usually appoint an independent expert to quantify the damage.
Third, indirect purchasers of goods or services affected by an infringement benefit from a rebuttable presumption that direct buyers passed on the overcharge. Defendants, however, can fend off damage claims from intermediary buyers by invoking the passing-on defense, i.e., reducing compensation to direct buyers by the amount the latter passed on to indirect purchasers. Even if the passing-on defense is successfully invoked, however, direct buyers are still entitled to compensation for any loss of profit resulting from the artificially inflated prices.
Intermediary buyers do not necessarily pass on the entire mark-up but may also absorb it partially or even completely in their own margins. Proving passing-on, and the extent or the absence thereof, is therefore difficult. In principle, defendants invoking the passing-on defense bear the burden of proof that such passing-on actually took place, but do not benefit from any presumption, as the legal presumption of passing-on benefits only indirect buyers (see below regarding access to evidence).
However, it is difficult to imagine that such presumption would not also influence the assessment of the relationship between the defendant and direct buyers. If the presumption is not taken into account, the defendant risks paying twice for the same damages: once to direct buyers, because he is unable to prove passing-on, and once to indirect buyers, because of the legal presumption. This would run counter to the principle that overcompensation is prohibited. Conversely, direct buyers risk being left empty-handed if courts, taking into account the passing-on presumption in favor of indirect buyers, are more easily led to assume that the mark-up was indeed passed on. Either way, the introduction of this presumption could have problematic (albeit unintended) consequences in practice.
Facilitating Access to Evidence
To address the information asymmetry between parties that often exists in these types of cases, where most of the evidence needed by claimants is typically in the hands of the defendant, the Law empowers the courts to order the defendant and/or third parties to disclose relevant evidence in their control. However, in order to protect the leniency and settlement regimes, leniency applications and settlement submissions have absolute protection from disclosure. Documents specifically prepared for antitrust investigations by parties or authorities have temporary protection until the competition authority has closed its investigation. All other documents are not protected, but their disclosure is subject to a proportionality test.
The Law, however, does not provide for discovery as it exists in the common law system, and it remains to be seen whether this will lead the Belgian courts to more readily order document production, as the Law does not necessarily derogate from the existing fairly restrictive conditions and procedures for disclosure of evidence of the Belgian Judicial Code. The courts will still have a wide discretion to grant or refuse access to evidence.
It is also worth noticing that not only claimants but also defendants can rely on the Law's provisions regarding production of evidence, for instance in support of a passing-on defense.
Undertakings that do not fully comply with an order to disclose evidence or destroy evidence risk fines of between €1,000 and €10 million. It is expected that this high maximum fine will have a sufficiently deterrent effect. The courts may also impose periodic penalty payments until attaining compliance with an order.
Joint and Several Liability of Infringers
The Law lays down the general principle that undertakings that participated in a competition law infringement are jointly and severally liable. This means that a cartel member may be held liable for sales made by another cartel member. However, the Law derogates from this rule for immunity recipients and for small to medium-sized enterprises ("SMEs") with a market share below 5 percent (except if they acted as leaders or coercers of the infringement or were repeat offenders). Immunity recipients and SMEs fulfilling these conditions, in principle, are liable only toward their own (direct or indirect) customers. However, they will still be fully liable if the claimant would otherwise be unable to obtain full compensation from the other infringers (e.g., in case of bankruptcy).
Claims are subject to a five-year limitation period, starting from the moment the infringement ends and the injured parties become aware of the infringement, the harm, and the infringer's identity. An investigation by a competition authority interrupts the limitation period until a final infringement decision is issued or until the investigation is otherwise concluded. To encourage out-of-court settlements, the limitation period is also suspended (for a maximum duration of two years) during a consensual dispute resolution procedure.
The Law does not derogate from the generally applicable Belgian regime for collective actions. This means in particular that such actions can be brought only by consumers, and not by businesses.
Three Key Takeaways
Transposition of the Directive into Belgian law should boost the private enforcement of antitrust law in Belgium. Parties that suffer harm from antitrust infringements can more confidently launch damages claims, e.g., following a cartel decision involving one of their suppliers.
In particular, the Law alleviates claimants' burden of proof, facilitates access to evidence, and enables claimants to await the outcome of a competition authority's enforcement procedure before initiating a civil damages suit.
The Law does not remove all potential obstacles to a successful damage claim, in particular because: (i) quantification of the damage remains a thorny issue to be determined on a case-by-case basis; and (ii) it does not provide for U.S.-style discovery or class actions by businesses.