On 22 June 2022, the European Court of Justice (the "ECJ") responded to a request for preliminary ruling from the Provincial Court of Léon in Spain (the "Provincial Court"). The Provincial Court's request emanated from the proceedings concerning Volvo AB & DAF Trucks NV ("V&D") and RM, whereby RM brought an action for damages seeking compensation from V&D due to their participation to a cartel existing between 1997 and 2011, which is contrary to Art. 101 of the Treaty on the Functioning of the European Union ("TFEU"). The request brought forward by the Spanish Court sought clarifications on the temporal scope of the rules governing the following three components when considering an action for damages due to the existence of a cartel:
- The limitation period for bringing an action for damages;
- The quantification of the harm incurred; and
- The rebuttable presumption of the existence of harm resulting from a cartel.
During 2006 and 2007, RM had purchased three trucks which were manufactured by V&D. Circa a decade later, the European Commission (the "Commission") issued a decision on 19 July 2016, whereby it deemed V&D to have participated to a cartel lasting between 1997 and 2011, wherein the participators agreed on, inter alia, fixing the prices of the trucks they sold, thereby infringing Art. 101 of the TFEU (the "Decision"). Upon being informed of the Decision, RM sued V&D before the Commercial Court of Léon in Spain (the "Commercial Court") on 1 April 2018, seeking compensation for the harm it suffered because of the cartel.
From a procedural standpoint, the Commercial Court considered RM's action to be admissible, as it considered RM's action to be within the 5-year limitation period prescribed by the Spanish legislation transposing Article 10(3) of Directive 2014/104 governing actions for damages incurred from infringements of competition law (the "Directive"). The Commercial Court also found RM's action to be substantively well-founded, relying on Article 17(2) of the Directive which establishes the rebuttable presumption that cartels cause harm to those affected by them. Considering the above, the Commercial Court ordered for V&D to pay RM compensation. V&D appealed this judgement before the Provincial Court, arguing that the action is time-barred since the cartel had ceased before the transposition of the Directive into Spanish law. Said appeal led to the request for the preliminary ruling at hand.
The ECJ's Assessment
The ECJ firstly referred to Article 22 of the Directive, which establishes the temporal applications that national courts are to follow when transposing the Directive's measures. Article 22 distinguishes between the temporal application to substantive and non-substantive provisions adopted in light of the Directive. In relation to the former, their retroactive application is expressly prohibited, whereas for the latter, their application is only allowed in relation to actions for damages brought after 26 December 2014.
Following the above, the ECJ delved into the temporal applicability of Article 10 of the Directive, which governs the limitation periods that Member States are to implement when they transpose the Directive, to the case at hand. The ECJ firstly established that Article 10 is a provision of substantive nature since its interpretation may determine the outcome of the legal action. The next step was to analyse whether Article 10 was applied retroactively in the case at hand.
It was noted that the Directive, whose transposition into Spanish law had a deadline fixed on 27 December 2016, was actually transposed into Spanish law 5 months later. To identify the temporal applicability of Article 10, the ECJ had to firstly identify whether the limitation period which was applicable to the case at hand had elapsed prior to the expiry date for the Directive's transposition. Prior to the Directive's transposition, the Spanish provisions in force at the time had prescribed a one-year limitation period to cases of this sort, and the limitation period would have begun to run once the infringement would have ceased and the injured party would have been reasonably expected to know that s/he has; incurred harm; identified the causal link between the harm incurred and the infringement of competition law; and identified the identity of the person committing said infringement. On this front, the ECJ established that the limitation period in this case had commenced on the day in which the Commission had published a summary of the Decision, which was 6 April 2017, since said summary contained all the information that RM needed to bring an action for compensation based on an infringement of Art. 101 of the TFEU. Considering the above, the ECJ concluded that RM's action falls within the temporal scope of Article 10 of the Directive, since the limitation period applicable under the old Spanish laws had not elapsed prior to the expiry date for transposing the Directive into Spanish law.
The ECJ then analysed the temporal applicability of Article 17(1) of the Directive, which basically authorises national courts to estimate the amount of damages incurred by an injured party when it is excessively difficult to quantify the damages incurred by an injured party. In this regard, the Court ascertains that this is a provision of a procedural nature, since it relates to determining the standard of proof required. Given that RM brought his action against V&D on 1 April 2018, and the temporal application to non-substantive provisions are allowed if they are brought after 26 December 2014, the ECJ confirmed that RM's action is within the temporal scope of Article 17(1) of the Directive, despite the cartel ceasing prior to the entry into force of the Directive.
With regards to Article 17(2) of the Directive, the ECJ noted that it is a provision of a substantive nature as the incurrence of harm is one of the necessary elements for a claim of civil liability, and so the presumption of harm imposed by said article may influence the outcome of a legal action. Due to its substantive nature, the ECJ concluded that Article 17(2) is not temporally applicable to RM's action. This is because the element which gives rise to the presumption of harm under Article 17(2) is the existence of the cartel, and so the fact that the cartel ceased prior to the transposition of the Directive, its application in this case would be retroactive, and therefore, prohibited.
Having received the above interpretations from the ECJ, the onus of deciding how the case between RM and V&D is to proceed has now reverted onto the Provincial Court.
This article was first published in the Malta Independent.
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