A more favorable legal regime for antitrust damages claims in the future

Author: Francisco Marcos, Professor of Law at IE Law School

The EU Antitrust Damages Directive (2014/104/EU) is the last step in the progressive decentralization of EU Competition law enforcement. For the very first time victims of antitrust infringements are, explicitly, recognized a main role in enforcing the competition prohibitions. The Directive firmly empowers them to claim damages against infringers if there has been harm that can be proven and traced back to the infringement. In this regard, it consolidates the case-law of the ECJ, reflecting also the influence of U.S. law (where damages claims are much more widely used in making antitrust prohibitions effective).

The Directive enshrines the right to compensation for anyone harmed by an infringement of competition law and introduces several rules regarding the content, the features, and the exercise of such a right before national courts. However, it does not change the traditional dynamics of the relationship between EU law and Member States’ national laws regarding the conditions in which victims’ claims have to be made. National rules on remedies, procedures, and institutions will be followed as long as the principles of effectiveness and equivalence are respected. Thus, it would clearly be going against the Directive if national rules made the right to compensation impossible or excessively difficult.

Many of the Directive’s provisions that encroach upon Member States remedial or procedural autonomy are drafted in a generic or vague manner, and this will surely raise interpretation problems in the future which may themselves render damages claims difficult. Questions remain in relation to many issues dealt with by the Directive, starting with its temporal scope; but uncertainties also persist in crucial aspects of multiple liability and claims by indirect victims when harm has flown along the supply-distribution chain (and the passing-on defence). Significantly, the most clear-cut and concise provisions of the Directive are those aimed at safeguarding public enforcement of competition law by restricting access to evidence contained in the files of competition authorities provided by the beneficiaries of immunity deals or by parties that have entered into a settlement agreement with a competition authority. The Directive sets absolute and temporal limits on access to these case files to prevent the disruption of public enforcement of competition law (leniency and settlement included). Nevertheless, even those rules may be controversial, as they run counter to the objective of facilitating damages claims since the prompt disclosure of information may ease the burden of proof and assist victims with the quantification of harm.

In sum, the harmonization sought by the Directive is limited and fragmented and it extends to only some of the issues relevant for the exercise of damages claims. It presents an incoherent framework, regulating some issues but not considering or even mentioning others. At the same time, the Directive’s provisions are inherently biased in addressing, for the most part, issues raised by follow-on claims, damage caused by cartels, and harm flowing downstream. Finally, in those matters upon which the Directive is silent, Member States’ domestic rules will continue to govern, subject to the principles of effectiveness and equivalence.

When compared to the pre-existing situation, the Directive improves the rules and legal tools for bringing forward successful antitrust damages claims. However, some of the legal solutions that are provided in the Directive appear too vague or too complex, which will inevitably lead to interpretation problems that, in turn, may negatively affect the outcome of damages claims or even the incentive to bring claims in the first place. Still, a more positive assessment is feasible. Focusing on its shortcomings, legal imperfections, and loopholes would not provide a full and accurate appraisal of its potential impact.

First, the Directive is the most recent step in the EU’s policy of enhancing antitrust enforcement by looking at a particular aspect—damages claims by victims—which was not previously covered by EU rules; but this does not mean that it is the final or definitive step. At this stage, this is the most that the compromise of different affected interests could deliver.

Second, and more importantly, the Directive is an achievement in itself. It is the corollary of the work by the European Commission on this subject, representing a significant component in the discussion of competition policy in the EU. The adoption of the Directive and its implementation among Member States has publicised the availability of damages claims within the enforcement landscape.

Third, given that the Directive leaves room for national remedial and procedural autonomy, idiosyncratic rules within Member States legal systems that do not contravene the principle of effectiveness will continue to exist and be applied.

Finally, it remains to be seen how the new rules adopted by Member States in compliance with the Directive will enhance or promote damages claims in particular and private enforcement of competition law in general.

Transposition in the Member States

The central narrative of the Directive and its reception across the States is that it ensures a certain minimum level of harmonisation of both important procedural and substantive rules which may be of significance for successful damages actions, with notable re-emphasis and reiteration of two established central principles: those of full compensation and effectiveness.

I’ve edited a book together with Barry Rodger & Miguel S. Ferro  (The Antitrust Damages Directive: Transposition in the Member States, published by Oxford University Press in December 2018) concerning the implementation in sixteen Member States and then compared the procedure and outcomes in those Member States (Belgium, France, Germany, Italy, Spain, the Netherlands, the UK, Greece, Ireland, Portugal, Sweden, Hungary, Poland, Lithuania, Cyprus and Luxembourg).

In terms of both transposition processes and outcomes, one can witness, distinctive national contexts and stories in each of those sixteen Member States. Transposition across them has involved a variety of different processes, legislative measures, stakeholder involvement, level of parliamentary debate, and timescales for implementation. In relation to the actual Directive provisions, there has been considerable resort to the simple copy-out technique, though there have also been aspects of gold-plating, particularly in relation to the substantive scope of the Directive’s provisions, albeit with considerable divergence across the Member States. In some Member States certain provisions were not transposed, often on the basis that there already was some national legal provision for the issue. The transposition of some provisions, for instance in relation to the binding effect of infringement decisions, clearly caused controversy in some Member States, and there is also the possibility that some of the ways in which certain provisions were transposed will indeed be incompatible with the Directive. One of the underlying problems here, recognised in some of the transposition processes, was that the Directive was essentially drafted by a public agency lacking familiarity with the particularities and divergences that exist in national procedural, private, and indeed constitutional law provisions across the EU.

Despite this, it has been acknowledged that certain provisions introduce significant and important claimant-favourable changes to existing practice, for instance in relation to the time-bar limitation rules and knowledge requirement for triggering the limitation period. Besides, the provisions on discovery and access to documentation were perceived in most States as constituting a revolutionary change in traditional modes of litigation practice. Notwithstanding these different impacts, the new provisions ironically also arguably constitute a step backward (at least from the perspective of potential cartel damages claimants) by backtracking from prior ECJ (and national) jurisprudence to automatically exclude litigant access to leniency application-based information.

Limitations in the transposition of the Directive

Nonetheless, the key problems in implementing the Directive concern the gaps around and behind the framework of many of the legal provisions as set out therein. Some of the Directive’s rules are drafted in broad and uncertain terms, providing discretion in their implementation, and many States have opted for leaving to national courts the task of interpreting them (f.e., presumption of harm, passing-on, and quantification of damages).

In truth, there are a range of specific issues where the precise application of the provision has been neither clarified by the general terms of the Directive nor its equivalent transposition measure, and there is consequently both considerable uncertainty remaining and/or the adoption by Member States of different views on how best and most appropriately to implement the provision. This is evidenced clearly for instance in relation to a number of key issues which may be central to establishing liability and which have already been considered by courts. Three such issues are causality and fault requirements, how to determine liability within groups of companies, and how to apportion joint and several liability between co-infringers. In the short term, at least, there is a serious risk of inconsistency in approach between different national courts and, consequently, the potential and incentive for forum-shopping.

Moreover, certain fundamental mechanisms, institutions, and rules, which are essential for a thorough and effective system of competition law damages actions, have been omitted completely from the Directive framework. These issues are effectively unregulated at the EU level and have been left to Member States to make appropriate provisions. The most significant absence is that of any Directive provision for collective redress (albeit noting the recommendation of the Commission of 11 June 2013 on the issue), although some Member States have taken the opportunity offered by the transposition process to review and reconsider their approach to consumer/collective redress in the context of competition law. Besides, the Directive has no provision in relation to specialised or centralised court structures within Member States for dealing with competition litigation, despite a growing consensus about the value of a specialised judiciary in this context.

Conclusion

The transposition of the Antitrust Damages Directive can be viewed as part of a slow process of minimal harmonisation of aspects of the procedural and substantive rules surrounding private antitrust enforcement, set in the context of national institutional, substantive, and procedural contexts and rules, and the overarching EU law requirement that these contexts must ensure the effectiveness of EU law rights. Indeed, the effectiveness of those rights will be further strengthened –this time regarding public enforcement of EU competition law- with the implementation of the recently published Directive 2019/1/EU of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market.

On the one hand, the new regime of the Antitrust Damages Directive introduces special rules for antitrust damages claims, which derogate a great number of general principles and rules in the domestic legal orders of several Member States. The Directive has already led to changes beyond its strict scope, namely as a result of the Member States option to harmonise the rules applicable to EU law and to purely national law infringements. But it is possible that the existence of these special rules in the legal orders of the Member States, relating to access to evidence, to time-barring, etc., which were introduced because they were deemed necessary for ensuring the effectiveness of the rights being protected, will, in the long run, lead to a broader debate about the justification of the more restrictive general regimes.

It seems everything will depend on the number and quality of public infringement decisions for subsequent follow-on cases, which consequently help to establish a sustained body of litigation practice thereby enhancing awareness of competition law, culture and rights.

On the other hand, regretfully, there is not a provision in the Antitrust Damages Directive dealing with either litigation costs or funding mechanisms, which are essential for creating a vibrant competition bar and which make different legal systems more attractive to competition claimants. Accordingly, uncertainty and scepticism remains about the extent to which the Directive and the national transposition measures will produce a significant impact on the level and success of competition damages actions. At the end, it seems everything will depend on the number and quality of public infringement decisions for subsequent follow-on cases, which consequently help to establish a sustained body of litigation practice thereby enhancing awareness of competition law, culture and rights.

Francisco Marcos is Professor of Law in IE Law School, he can be reached at francisco.marcos@ie.edu, he is the editor with Barry Rodger and Miguel S. Ferro, The Antitrust Damages Directive: Transposition in the Member States, which has just been published by Oxford University Press. The comparative analysis of the implementation in chapters 19 and 20 of the book as been nominated by Concurrences for the Antitrust Writing Awards 2019. 

Note: The views expressed by the author of this paper are completely personal and do not represent the position of any affiliated institution.