EU adopts directive to tackle antitrust damages actions

A new European directive (“the EU Antitrust Damages Directive”) designed to help individuals and companies claim damages if they become victims of infringements of EU antitrust rules has been formally adopted by EU ministers in November 2014 and signed into law.

The aim of the Directive is to facilitate citizens and companies to pursue claims for breaches of EU competition law before their national courts and to seek damages for infringements of antitrust rules.

Competition litigation specialist Alessandro Gravante of Giambrone, the international law firm, said: "This directive primarily addresses the widely diverging rules of member states, as currently the chances of victims to obtain compensation greatly depend on which member state they happen to live in. Currently, the private enforcement of competition law by way of damages actions has significantly lagged behind the public enforcement regime and such actions have been concentrated in only few member states" said Gravante. "I anticipate that the implementation of the Directive will lead to an increase in private damages actions in the EU, although it remains to be seen how the changes outlined above will operate in practice, particularly as regards disclosure and the recognition of infringement decisions by other Member States. It remains to be seen whether litigants will continue to favour those jurisdictions which already have sufficient competition law expertise and which are experienced in handling these types of actions.”   

The main changes brought about by the Directive

  • The Directive clarifies that anyone who is a victim of an infringement of antitrust rules has a right to obtain full compensation for actual losses and for loss of profit, plus payment of interest (Art. 3 of the Directive).
  • National courts can order the disclosure of evidence relevant to a claimant’s claim for compensation by the defendant (excluding leniency statements and settlement submissions produced under leniency programmes and settlement procedures). The claimant has to present a reasoned justification for the disclosure. The courts will ensure that such disclosure orders are proportionate and especially that confidential information is protected (Art. 5 of the Directive).
  • The finding of an infringement by a competition authority will automatically constitute proof of that infringement before courts of the same member state in which the infringement occurred and it  should not be ‘re-litigated’ in a subsequent damages action.  Where the claim is brought in the same Member State as the authority or court that made the finding, that finding will be full proof of an infringement.  Where the action takes place in a different Member State, the finding will be deemed to be prima facie evidence of an infringement. (Art. 9 of the Directive).
  • The limitation period amounts to five years and is interrupted or suspended from the moment a competition authority starts investigating an infringement. The limitation period starts to run from the time the claimant is aware, or can reasonably be expected to be aware, of: i) the behaviour and the fact it constitutes an infringement; ii) the resulting harm; and iii) the identity of the infringer. (Art. 10 of the Directive).
  • During consensual settlement negotiations, the limitation period is suspended. National courts seized of an action for damages can suspend their proceedings for up to two years in order to allow a consensual resolution of disputes (Art. 18 of the Directive).
  • Victims will have one year to claim damages once an infringement decision by a competition authority has become final.
  • Where more than one undertaking participates in an infringement, they will be jointly and severally liable for the harm caused by the infringement of competition law, with the exception of infringers who have obtained immunity from fines as part of a leniency programme. It should however be noted that an immunity recipient may also be liable to its direct or indirect purchasers or providers, if the injured parties cannot obtain full compensation from the other involved undertakings (Art. 11 of the Directive).
  • Passing-on defence:  Where a defendant seeks to show that a claimant has offset an overcharge resulting from an infringement by passing it on to its own customers, the burden of proving the pass-on shall be on the defendant.  Where the end-customer wishes to bring its own claim for damages in relation to the overcharge it has incurred by way of pass-on, the burden of proving the existence and scope of the pass-on will be on that end-customer claimant (Art. 13 of the Directive).
  • The Directive establishes a rebuttable presumption that cartels cause harm, lessening the evidentiary burden on claimants. Infringers have the right to rebut this presumption. Concerning the quantification of harm, rules should be applied which do not render the right to claim damages practically impossible or excessively difficult. Furthermore, the national courts have the right to estimate the amount of harm (Art. 17 of the Directive).
  • If an infringement has caused price increases and these have been ‘passed on’ along the distribution chain, those who suffered the harm in the end will be entitled to claim compensation. In principle, indirect purchasers have a right to claim compensation of damages from the infringer, but the burden of proving the existence of such passing-on rests with the claimant (indirect purchaser). The passing-on is proven in case it is demonstrated that the defendant has committed an infringement of competition law, the infringement of competition law has resulted in an overcharge for the direct purchaser of the defendant, and the indirect purchaser has purchased the goods or services that were the object of the infringement of competition law, or has purchased goods or services derived from or containing the former (Art. 14 of the Directive).

It is already well established that EU competition law has direct effect and the Court of Justice of the EU has already acknowledged the right for victims of antitrust infringements to be compensated for the harm suffered, meaning that anyone can claim compensation before national courts for harm caused to them by an infringement such as a cartel or an abuse of a dominant market position. 

However, due to national procedural obstacles and legal uncertainty, only few victims currently obtain compensation as the procedural aspects of individual national legal systems have made this difficult and marked differences in the different countries have led to uncertainty and the uneven enforcement of the right to compensation across the EU.  The new Directive aims to remove a number of these procedural obstacles to obtaining compensation and the geographic disparities in the enforcement of the right to compensation.

The Directive has entered into force on 27 December 2014, but it will need to be transposed into national law as Member States have two years to implement it in their national legislation. During the window period of the next two years, the EU Antitrust Damages Directive will predominantly influence the interpretation of current antitrust law. 

About Giambrone's EU Competition Team

We cover all areas of antitrust and competition law enforcement and litigation: antitrust and IP; antitrust disputes including private damages, commercial disputes and judicial reviews; cartels; compliance and counselling; merger control; public procurement and competitive tendering; sector regulation, abuse of dominance/monopolisation and market investigations; and state aid. 

Our team, located across London, Milan and Barcelona, includes leading practitioners with years of experience advising on the most complex transactions and cases at EU and national level. Our lawyers have conducted competition damages actions before the national courts, the European Courts of Justice, the Competition Appeal Tribunal (CAT) and in mediations.

For more information, contact: Alessandro Gravante (a.gravante@giambronelaw.com or call at: +39 091 743 4778)