On 28 March 2019, the Court of Justice of the European Union ("ECJ") ruled on a preliminary reference from a Portuguese court on the scope of the Portuguese limitation period in light of Directive 2014/104 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 "Damages Directive").
By way of background, in June 2013, the Portuguese Competition Authority ("PCA") held that Sport TV had abused its dominant position within the meaning of both Article 102 of the Treaty on the Functioning of the European Union ("TFEU") and the corresponding Portuguese provision, and imposed a fine of € 3.7 million. On appeal, the finding that Sport TV infringed Article 102 TFEU was overturned and the fine was reduced to € 2.7 million. In February 2015, Cogeco Communications brought an action against Sport TV seeking compensation for the harm caused by the anti-competitive practices established by the PCA.
As a matter of Portuguese law, prior to the implementation of the Damages Directive, claimants in Portugal faced a three-year limitation period which commenced from the date on which the injured party was aware of its right to compensation, even if unaware of the identity of the infringer and the full extent of the damage. On 26 November 2014, the Damages Directive was adopted. It provides for a longer five-year limitation period which may be suspended during an investigation by a national competition authority. However, the Damages Directive provides that its substantive provisions only apply to actions brought after the deadline for its transposition on 27 December 2016. At the same time, Member States had a measure of discretion to decide whether or not to apply the procedural provisions of the Damages Directive to actions brought after its adoption. Further, the Portuguese legislation that transposed the Damages Directive entered into force on 4 August 2018, and its procedural provisions only apply to actions brought after that date. As the Portuguese court had doubts about the application of the limitation period, it referred the case to the ECJ to determine whether (i) the Damages Directive applied and (ii) the Portuguese limitation period was compatible with the EU principle of effectiveness.
In its judgment, the ECJ held that the Damages Directive did not apply to the case as it was permissible for Portugal to apply the procedural rules in the Damages Directive only to actions brought after the entry into force of the transposing national rules. Importantly, however, the ECJ concluded that the short three-year limitation rules in Portugal which did not allow for a suspension period were not compatible with the principle of effectiveness enshrined in EU law. The ECJ considered that the practical effect of Article 102 TFEU would be put at risk if it were not open to an individual to claim damages for loss caused by abusive conduct within the limitation period set down in Portuguese law. The ECJ undertook a broader assessment of the Portuguese rules on limitation periods in competition-based actions for damages. Drawing on its previous judgment in Kone (Case C-577/12, Kone and Others), the ECJ held that Article 102 TFEU and the principle of effectiveness prohibit short limitation periods that start to run before the person injured by the infringement is able to ascertain the identity of the infringer, or which cannot be suspended during an investigation, as it may render the exercise of the right to claim compensation practically impossible or excessively difficult.
The case is noteworthy as it is the first time that the ECJ has substantively interpreted a provision of the Damages Directive, even though it was held not to apply to the facts of the case. More broadly, the judgment confirms that claimants may rely on the principle of effectiveness in cases where formal national rules make it practically impossible for claimants to vindicate their legal rights.
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