The New Directive on Actions for Damages for Infringements of Competition Law
In the present post we want to make a brief explanation 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 desire of the European Institutions for the creation of mechanisms to fight against practices that restrict competition in the Internal Market is not new at all. Already in articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) a list of prohibited practices is provided..
Likewise, Regulation 1/2003 related to the application of competition rules sets out a list with the actions that can be taken by the competition authorities of the Member States such as the imposition of fines or periodic penalty payments, orders to cease of the infringement or preliminary injunctions.
However, there was a key element not present in this legislative framework., That is a regulatory text that guarantees the practical effect of the prohibitions established in articles 101 and 102 of TFEU and facilitate anyone affected by competition infringement practices to claim for damages compensation.
In this regard, Directive 2014/104, complements Regulation 1/2003, and states a number of rules that shall be included by the Member States in the internal regulations at issue. This means the conclusion of a process which stated more than 10 years ago with judgment of ECJ dated 20 September 2001, C-453/99, “Courage”
Amongst the most important points of this Directive, stress should be laid on the following.
a) Right to full compensation due to infringement of European Competition Law. Art. 3 states that full compensation shall place a person who has suffered harm in the position in which that person would have been had the infringement of competition law not been committed. It shall therefore cover the right to compensation for actual loss and for loss of profit, plus the payment of interest that could be claimed by anyone suffering harm regardless of a direct or indirect purchaser. Nevertheless, the Directive warns that full compensation under this Directive shall not lead to overcompensation, whether by means of punitive, multiple or other types of damages. Indeed, these kinds of compensations, very common in the United States, are not admitted in EU Law.
b) Rules on evidences. The Directive establishes several rules related to the disclosure of evidences held by the defendant (article 5) and about theaccess to evidences included in the administrative file of a competition authority (article 6).
In relation to the first category of rules, the procedural institutions of Discovery has been introduced as a novelty . Upon request of a claimant who has presented a reasoned justification containing reasonably available facts and evidence sufficient to support the plausibility of its claim for damages, national courts in proceedings relating to an action for damages in the Union are able to order the defendant or a third party to disclose relevant evidence which lies in their control. National courts can also order the disclosure of evidence containing confidential information where they consider it relevant to the action for damages provided that effective measures to protect such information are established.
With regards to the second category of rules, the Directive states that the national courts shall be able to order the disclosure of evidence included in the file of a competition authority. The aforementioned could be carried out respecting the regulation in terms of public access to documents contained in Regulation 1049/2001 and the European Law practices over protection of internal documents of competition authorities.
c) Limitation periods for bringing actions. Art. 10 sets out a limitation period for bringing actions for damages of at least 5 years. The Member States lay down rules applicable to limitation periods for bringing actions for damages that determine when the limitation period begins to run and the circumstances under which it is interrupted or suspended.
d) Joint and several liability. Art. 11 states that undertakings which have infringed competition law through joint behaviour are jointly and severally liable for the harm caused by the infringement of competition law. This way, each of those undertakings is bound to compensate for the harm in full, and the injured party has the right to require full compensation from any of them until he has been fully compensated.
Two exceptions are added to this general rule, in point 2 of article 11:
- Firstly, liability is limited to damages caused by small or medium-sized enterprise (SME) to its own direct and indirect purchasers where its market share in the relevant market was below 5 % and the application of the general rules of joint and several liability would irretrievably jeopardise its economic viability and cause its assets to lose all their value.
- Secondly, an exception is applied to an immunity recipient who is only jointly and severally liable to its direct or indirect purchasers or providers and to other injured parties only where full compensation cannot be obtained from the other undertakings that were involved in the same infringement of competition law.
e) “Passing off defence” theory. According to art. 13, Member States shall lay down procedural rules appropriate to ensure that compensation for actual loss at any level of the supply chain does not exceed the overcharge harm suffered at that level.
The “passing off defence” theory consists of the possibility the defendant has to invoke as a defence against a claim for damages the fact that the claimant passed the overcharge resulting from the infringement of competition law to his clients, and thereupon, he did not suffer harm. The burden of the evidence shall be on the defendant.
f) Consensual dispute resolution. Lastly, Art. 18 establishes that the limitation period for bringing an action for damages is suspended for the duration of any consensual dispute resolution process. An action for damages may suspend the proceedings for up to two years where the parties thereto are involved in consensual dispute resolution concerning the claim covered by that action for damages. This measure aims to encourage the parties to solve the dispute in an amicable way by means of measures such as mediation or arbitration.
As it has been already said all these mechanisms aim to ensure full compensation for damages resulting from competition infringement, achieving thereby, a harmonization in the regulations of the Member States. The Member States shall be bound to adopt all necessary internal measures for the fulfillment of the present directive until 27 November 2016 at the latest.
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