On 10 November 2014, the European Council formally adopted the Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (the "Directive").
The Directive was proposed in June 2013 as part of a package to address major legal and practical obstacles that, in many EU Member States, prevent the effective exercise of the right to damages for violations of competition law (see VBB on Competition Law, Volume 2013, No. 6, available at www.vbb.com). However, a number of its provisions have been adjusted in the course of the legislative process, most notably those relating to the evidentiary effect of Member State competition authority decisions, the disclosure of evidence in a competition authority's files, and claims by indirect purchasers and the passing-on defence.
As now adopted, the Directive provides a legal framework that Member States must implement to govern actions for damages under national law for violations of EU competition law or of national laws that parallel EU competition law.
First, the Directive codifies case law of the European Court of Justice by explicitly recognising a right to full compensation for harm caused by infringements of competition law, encompassing actual loss, loss of profit, and interest. The Directive likewise provides that national rules regarding the exercise of this right must conform to the principle of effectiveness (the exercise of the right must not be practically impossible or effectively difficult) and the principle of equivalence (such rules must not be less favourable than those governing similar actions relating to national law). In addition, however, the Directive also explicitly provides that full compensation may not lead to overcompensation, whether by means of punitive, multiple, or other types of damages.
Next, the Directive seeks to address difficulties claimants frequently face with regard to access to evidence. To this end it provides that national courts must be able to order the disclosure of items of evidence or "relevant categories of evidence" upon the request of a claimant presenting a reasoned justification sufficient to support the plausibility of its claim. However, this disclosure must be proportionate, considering, among other factors, the need to prevent so-called 'fishing expeditions'. The Directive requires penalties for parties that refuse to comply with disclosure orders or destroy evidence.
However, in order to safeguard the effectiveness of public enforcement, which frequently relies upon leniency programs and the cooperation of defendants, special rules will apply to the disclosure of evidence from the investigation of a competition authority. Certain such evidence will be permanently protected from disclosure, in particular all voluntarily-provided leniency statements and settlement submissions. Other evidence will be protected from disclosure until the competition authority's proceedings are closed, namely all other information prepared specifically for the proceedings (such as responses to requests for information), information drawn up by the authority and sent to the parties, and withdrawn settlement submissions. All other evidence – including contemporaneous documents – will be disclosable at any time, subject to a further proportionality test considering, among other factors, the need to safeguard the effectiveness of leniency programs.
As a further source of evidence in damages actions and to prevent conflicting results, the decision of a Member State's competition authority will irrefutably establish an infringement in that Member State's courts. Decisions of another Member State's national competition authority will constitute at least prima facie evidence.
Next, the Directive seeks to harmonise a number of procedural rules regarding the exercise of the right to damages.
In this respect, limitation periods must be at least five years, beginning at the earliest after the infringement has ceased and the claimant knows or reasonably should know of its claim. Limitation periods must also be suspended during and for at least one year after a competition authority's investigation.
The Directive requires that co-infringers be jointly and severally liable but able to recover contribution from one another based on their relative responsibility for the harm caused. However, immunity recipients will be jointly and severally liable only to their direct and indirect purchasers or where the claimant cannot otherwise obtain full compensation.
The Directive also resolves legal uncertainties by providing clear rules regarding claims by indirect purchasers and the passing-on defence. It states that indirect purchasers have a right to full compensation for the harm suffered, but that the defendant may use the "passing-on" defence to show that harm was reduced or eliminated. The defendant will bear the burden to prove pass-on. However, indirect purchasers will enjoy a presumption that harm was passed on to them where they prove the defendant's infringement caused an overcharge to direct purchasers and the indirect purchaser bought the product subject to the infringement. Courts must avoid multiple liability by considering other cases and information in the public domain.
Furthermore, the Directive requires that courts are empowered to estimate the amount of harm where the claimant demonstrates it suffered harm but cannot precisely quantify it on the evidence available. At the same time, it will be rebuttably presumed that cartel infringements cause harm.
Finally, the Directive provides rules to facilitate consensual dispute resolution, such as the suspension of limitation periods during the process and the reduction of settling claimants' claims by the share of harm of the settling co-infringer.
The Directive will enter into force 20 days after its publication in the Official Journal. Member States will then have two years to implement the Directive. Member State legislation specifically implementing the Directive shall not apply retroactively, including to any actions commenced before the entry into force of the Directive.
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