Explore our collection of PDF documents and enrich your knowledge now!
back
Individual or collective actions for the private enforcement of competition law infringements facilitated and promoted by an European Directive
Article Competition, Retail and Consumer Law Commercial and International Contracts | 27/11/14 | 11 min. | Renaud Christol
The directive on antitrust damages actions which should be signed into law at the end of November 2014, facilitates compensation for victims of competition law infringements and encourages them to bring such actions, whether individually or collectively.
Upon an initiative of the European Commission (“the Commission”) in 2013, the Council of the European Union (the “EU”) formally adopted on November 10, 2014 a proposal for a directive (“the Directive”) on damages actions which can be brought, individually or collectively, by victims – companies, consumers or public authorities – of infringements of EU antitrust rules.
Standardization of procedural principles
The Commission had noted that although the victims of anti-competitive practices were entitled to claim compensation before national courts in all Member States, only 25% of the sentences adopted by the Commission were actually followed by damages actions brought by the victims of such competition law infringements[1].
Therefore, the Commission wished to facilitate the compensation of the victims and remove the obstacles that were likely to prevent them from claiming such compensation. These are the objectives pursued by the Directive.
First, the Directive enshrines the right to full compensation as a general principle. Victims of competition law infringements should be able to obtain compensation for the harm actually suffered (overcharges or loss of turnover) and also for the loss of profit[2].
Then, the Directive asserts that final decisions rendered by a national competition authority (“NCA”) which find an infringement constitute irrebuttable evidence of such infringement before the courts of the relevant Member State and “prima facie evidence” before the courts of the other Member States[3].
However, the Directive does not limit private enforcement actions to those which take place after the final sentence of a NCA and offers victims the possibility of bringing a private enforcement action even though no proceedings have been brought or are still pending before a NCA.
The Directive adds that once the competition authority’s decision becomes final, victims should have at least one year to bring a damages action, and, in any case, at least five years from the moment the infringement ceased or was discovered by the victims[4].
Then, the Directive addresses the crucial issue of access to evidence of the harm and the causal link between the illegal practice and the alleged harm[5]. It provides that national courts should be able to order defendants, but also claimants and third parties, to disclose all necessary evidence, subject to the disclosure being justified, proportionate and limited to relevant information. National courts should also have efficient measures to protect confidential information contained in the evidence the production of which is ordered by such courts[6].
Maintaining the attractiveness of procedures used as alternatives to sanctions
Regarding more specifically documents related to NCA’s case, national courts may, subject to exceptions, order the NCA to disclose such documents at any time within the framework of a damages action when they cannot be reasonably provided by a party or third party[7].
The Directive provides nonetheless two exceptions to such disclosure. First, in order not to interfere with ongoing investigations, the “information that was prepared by a natural or legal person specifically for the proceedings of a competition authority” (replies to requests for information or witness statements) or “that the competition authority has drawn up and sent to the parties in the course of its proceedings” (statement of objections) and settlements submissions that have been withdrawn can only be disclosed once the NCA has closed its proceedings[8]. Second, a national court may never order the disclosure of leniency statements or settlements submissions[9]. It may only, upon the request of a claimant, acknowledge them in order to make sure, alone or with the help of the competent NCA and the authors of such evidence, that their content does not fall outside the scope of the definitions of leniency declarations and settlements submissions provided by the Directive[10]. If only one part of the documents corresponds to such definitions, the other part may be disclosed within the context of a damages action[11].
Any evidence produced in breach of such principles must be deemed inadmissible[12].
Lastly, the Directive raises the passing on defense[13] issue and provides that if a harm has resulted in price increases which have been passed along the distributive chain, only the persons who will have actually sustained the harm will be entitled to compensation. The victims who will have passed on the overcharge to their own customers may not claim compensation, except in the event of a partial passing on of such overcharge or loss of profit[14].
Impact of the Directive on French law
French law already includes some of the Directive’s provisions. It provides that the decision which finds competition law infringements and which is no longer subject to appeal, sets out the breaches in an irrebuttable manner, and that damages actions may be brought within five years of such final decision[15].
However, amendments to French law will be necessary, within two years of the entry into force of the Directive, to implement the other provisions of the Directive. Although Article L.462-3 of the French Commercial Code provides since 2012 that the French Competition Authority (the “FCA”) “may submit at any time any element it holds concerning the relevant anti-competitive practices (…), to any court which refers to it or asks it to disclose elements which are not already held by a party to the proceedings” excluding the documents collected or drawn up in the context of a request for leniency, it does not provide that non-contest declarations are also excluded from the documents that may be produced by the FCA before national courts.
Nor does it make a distinction between the documents which may be provided during the proceedings and those which may only be provided when the proceedings before the FCA are closed.
Above all, class actions for the private enforcement of competition law infringements can currently only be brought by consumers and only when the record of offence has become final[16].
Consequently, the legislative amendments necessary for French law to comply with the text of the Directive may be a good opportunity to extend [17].
Renaud Christol, Counsel
Elsa Pinon, Associate
[1] See the Commission’s press release dated June 11, 2013, IP/13/525.
[2] Article 3§3 of the Directive.
[3] Article 9 of the Directive.
[4] Article 10 of the Directive.
[5] See our flashes on this subject “The documents related to the Competition Authority’s case may, subject to certain terms and conditions, be obtained by the claimant of in private enforcement proceedings” dated September 2012, “Submission of the Competition Authority’s case files in the context of private enforcement proceedings” dated December 2012, and “The claimant may use the Competition Authority’s case exhibits in the context of private enforcement proceedings” dated November 2013.
[6] Article 5 of the Directive.
[7] Article 6§9 of the Directive.
[8] Article 6§5 of the Directive.
[9] Article 6§6 of the Directive.
[10] Article 6§7 of the Directive.
[11] Article 6§8 of the Directive.
[12] Article 7 de la Directive.
[13] The “passing-on defense” consists, for the defendant, in preventing the direct purchaser’s action for damages by claiming that the latter passed on the overcharge caused by the harm to his own customers and that he cannot invoke any loss.
[14] Article 12 of the Directive.
[15] Article L.423-17 of the Consumer Code and the ECJ’s Courage decision, dated September 20, 2001, case C453/99 and Mandfredi et a. decision, dated July 13, 2006, joint cases C295/04, 296/04, 297/04 and 298/04.
[16] See our flash entitled “Introduction of class action in France for the private enforcement of competition law infringements” of March 2014.
[17] Such amendments are envisaged in particular by the FCA (see interview given by Bruno Lasserre, president of the FCA, in the FCA’s 2013 annual report summary).