ARTICLE
18 November 2016

European Commission Publishes Study On The Passing-On Of Overcharges

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Van Bael & Bellis

Contributor

Van Bael & Bellis is a leading independent law firm based in Brussels, with a second office in Geneva dedicated to WTO matters. The firm is well known for its deep expertise in EU competition law, international trade law, EU regulatory law, as well as corporate and commercial law. With nearly 70 lawyers coming from 20 different countries, Van Bael & Bellis offers clients the support of a highly effective team of professionals with multi-jurisdictional expertise and an international perspective.
A DG Comp public consultation is anticipated on the draft Guidelines.
European Union Corporate/Commercial Law

On 25 October 2016, the European Commission's Directorate-General for Competition ("DG Comp") published an expert study on potential approaches for national courts to assess the passing-on of overcharges in competition litigation ("the Study").

The Study aims to provide judges and practitioners with practical guidance on assessing economic evidence in relation to the passing-on of overcharges in the context of competition law infringements. The Study precedes the forthcoming EU-wide Guidelines on assessing passing-on of overcharges and the implementation of Directive 2014/104/EU ("Cartel Damages Directive") across the EU. Pursuant to the Cartel Damages Directive, which establishes the new legal framework for pass-on, any person who has suffered harm caused by a competition law infringement may claim full compensation for that harm. That includes indirect claims brought by those who are not directly affected by the infringement, such as indirect purchasers which are nevertheless harmed as a result of the changes in behaviour of the direct purchasers.

As an overview, the Study sets out the framework for evaluating the plausibility of claims, for quantifying the effects of pass-on and for assessing the total extent of harm suffered by a claimant. Three distinct elements of recoverable harm are identified in the Study, namely (i) the increase in the claimant's costs (the 'overcharge') caused by the infringement, (ii) the passing-on of the overcharge by the claimant to its customers, by means of price increases and their downstream effect, and (iii) the volume effect of a claimant suffering a loss of sales volumes as a consequence of pass-on. As part of this, the Study addresses the effects of pass-on on competition, the impact of buyer power, the relationship between pass-on and volume effects, and provides approaches to the quantifying of the impact of pass-on. In regard to the judges' role in assessing the economic evidence of pass-on, the Study offers recommendations on how to manage expert evidence, data and disclosure requests, and includes a 39-step practical checklist that judges can follow when assessing pass-on in damage claims.

Additional quantification guidance based on the Study is expected to be provided by the Commission in the form of Guidelines for national courts on the passing-on of overcharges. A DG Comp public consultation is anticipated on the draft Guidelines.

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.

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