European Union: European Union Approves Directive On Antitrust Damages Actions

Earlier today, the Council of the European Union approved the long-awaited Directive governing actions for damages for infringements of competition rules (Damages Directive). The Damages Directive is based on a proposal by the European Commission (Commission) that followed more than ten years of intense debate in the EU on whether it should have a common framework for antitrust damages actions, and if so what this framework should be.

Main provisions

The Damages Directive is meant to ensure that anyone can claim compensation before the national courts in the EU for any harm caused by an infringement of competition law. As many competition law infringements have cross-border effects across the EU, the Damages Directive stresses the need to ensure a level playing field for damages actions across the EU. To achieve this aim, the Damages Directive establishes certain minimum requirements the member states have to implement in order to ensure the effective exercise of the EU right to claim compensation for competition law infringements in member states.

Right to full compensation. The member states have to ensure that anyone who has suffered harm through an infringement of competition law is able to claim and obtain full compensation (actual loss, lost profits, interest).

Disclosure of evidence. The national courts will be able to order the defendant or third parties to disclose relevant evidence to plaintiff if plaintiff presents a reasoned justification to the court containing reasonably available evidence sufficient to support the plausibility of the plaintiff's damages claims. Conversely, the national courts will also be able to order the plaintiff or third parties to disclose relevant evidence to the defendant.

The Damages Directive also includes safeguards against overbroad discovery. The party requesting disclosure has to describe the evidence it requests as precisely and narrowly as possible. Moreover, disclosure of evidence is limited by the principle of proportionality, which requirement was included to prevent fishing expeditions. Accordingly, generic disclosure requests (such as for the disclosure of all documents in the file of a competition authority) will not be granted.

The national courts will be able to order the disclosure of evidence containing confidential information, but at the same time will have to take the appropriate measures to protect such information. For instance, the courts could limit the disclosure to the parties within a ring of confidentiality.

Importantly, amnesty/leniency statements and settlement submissions are protected against disclosure. This was the main point of dispute during the negotiations leading up to the passing of the Damages Directive. The European Court of Justice (ECJ) held in Pfleiderer (2011) and Donau Chemie (2013) that amnesty/leniency statements are, as a rule, not exempt from disclosure under applicable national laws, in the absence of an EU instrument that regulates the matter. However, given that the large majority of cartels are discovered as a result of leniency applications, the Commission and the national competition authorities considered it essential to ensure the protection of such applications. While the Damages Directive now provides for the protection of such submissions, preexisting documents that were submitted as annexes to amnesty/leniency applications (such as incriminating emails) are not protected and can be disclosed by the national courts. Responses to requests for information (such as sales data) are protected until the end of the infringement proceedings.

Binding effect of national antitrust decisions. Already today, decisions by the Commission finding an infringement are binding upon the national courts. The Damages Directive extends that binding effect to decisions by national competition authorities finding an infringement of competition law, which decisions will now also be binding on the civil courts in that country. Decisions by competition authorities of other member states will not be binding. However, the Damages Directive emphasizes that such decisions should be recognized as prima facie evidence in follow-on damages actions across the EU.

Limitation periods. The limitation period for damage claims for the infringement of competition law will be at least five years. It shall not begin to run before the infringement has ceased and the plaintiff knows or can reasonably be expected to know (i) the relevant behavior and the fact that it constitutes an infringement of competition law, (ii) that the infringement caused harm to plaintiff, and (iii) the identity of the infringer. In addition, the limitation period is suspended as long as a competition authority investigates the infringement.

Joint and several liability. Companies that infringed competition law through joint behavior – in particular, in cartels – are jointly and severally liable for any harm caused by that behavior. Therefore, the injured party has the right to require full compensation from any of these companies, while the infringing companies have contribution claims against each other. There are two exceptions:

First, in order to keep leniency programs attractive, the Damages Directive provides for an exception for companies that have been granted amnesty. Such companies are jointly and severally liable only to their own (direct or indirect) purchasers and suppliers. Other injured parties can recover compensation only if they cannot obtain full compensation from any of the other companies involved in the infringement.

Second, a small or medium-sized company will also be liable only to its own (direct and indirect) purchasers if (i) compensating the entire harm would jeopardize its economic viability, (ii) its market share was below 5% throughout the infringement and (iii) it did not lead the infringement. This exception was fiercely debated and caused Germany, Poland and Slovenia to abstain from voting on the Damages Directive in the Council. It raises a considerable number of difficult legal and factual questions so that its practical implications will likely be small at best.

Passing-on. The Damages Directive recognizes the so-called passing-on defense, pursuant to which an infringing company can defend itself against a damage claim by arguing that the plaintiff (its direct customer) has passed on the cartel overcharge to its own customers. However, the burden of proof lies with the infringer, which can try to meet this burden by requesting disclosure from the plaintiff or a third party. The national courts will have the power to estimate the amount of the overcharge that was passed on.

The Damages Directive also establishes that indirect customers can also claim antitrust damages. Indirect customers have to proof that their suppliers (the direct customers of the cartelist) passed on the cartel overcharge to them. However, the Damages Directive contains a (rebuttable) presumption of such a pass-on provided that (i) the defendant committed an infringement, (ii) the infringement resulted in an overcharge for the direct purchaser, and (iii) the indirect purchaser purchased the good or services that were the object of the infringement.

Quantification of harm. The Damages Directive establishes a rebuttable presumption that the infringement of antitrust law caused harm. In addition, the national courts will have the power to estimate the amount of harm suffered provided that it is practically impossible or excessively difficult precisely to quantify the harm suffered.

Implications

The Damages Directive is a major step forward in strengthening antitrust damages actions in the EU. It will enter into force 20 days after its publication in the EU's Official Journal. The member states will have two years to implement the provisions of the Damages Directive in their national laws.

Notably, the Damages Directive will require only limited changes to the national laws in the three countries in which most damages actions have so far been brought – Germany, the Netherlands and the United Kingdom. Nonetheless, even in those countries changes will be needed, such as to the statute of limitations in Germany. That said, the Damages Directive will have its most significant impact on the other member states, where private litigation for antitrust damages currently is less developed.

The Damages Directive is binding upon the member states, not on the Commission. However, there could be an interesting side effect on the Commission's procedures. Currently, for all practical purposes, plaintiffs cannot access the Commission's files, whereas the Damages Directives empowers the national courts to order the disclosure of certain information the national authority has on file. The Commission is working on streamlining its (very narrow) rules for disclosure with the (broader) new rules in the Damages Directive.

The Damages Directive is available in English on the Commission's web site.

Please also see our Alert on the Commission's proposal for a Damages Directive of June 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Alex Petrasincu
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions