Spain: Developments in competition damages claims: Take II

Written on 20 Dec 2018

The divide between the mercantile courts of Madrid and Barcelona grows: Another insightful judgement of the Mercantile Courts of Barcelona in the framework of the Spanish envelopes cartel damage claims unveils how Barcelona judges will apply the Damages Directive in a clear way.

Now we know Barcelona is the place to go…
As promised in our previous article, we will now look at another judgement of the Mercantile Courts of Barcelona in the framework of the Spanish envelopes cartel. Likewise, we have learned that all the judgements from the courts of Barcelona were favorable to claimants and all the judgements from the Madrid courts were favorable to defendants. This reveals that for the moment Barcelona is the place to go if you want to claim damages in Spain.

Insights in relation to substance matters
In the second judgement (ECLI:ES:JMB:2018:2166), the Barcelona courts now tackle more substance related issues than in the other judgements, where the focus was more on previous procedural exceptions and the experts report value.

This particular judgement is very insightful, since it shows how the Barcelona courts will apply and interpret the provisions of the Damages Directive in the context of Spanish law. The highlights of the judgement relate to defenses posed by the cartelist in relation to:

  • the extent of the responsibility of a leniency applicant;
  • the allocation of responsibility to the defendants in conjunction with the Spanish principle of solidaridad impropia; and
  • whether or not the concept of undertaking under competition law could be applied when awarding damages on actions based on civil law.

Responsibility of the leniency applicant
One for the defendants. The leniency applicant in the Spanish envelopes cartel, alleged that, as applicants they could not be made to pay damages to the claimants since they did not purchase envelopes directly from them. They could only be made to pay damages if the rest of the cartelists could not cover the total amount of damages awarded.

The judgment, applied the doctrine of the Court of Justice of the European Union (CJEU) in relation to the interpretation of a member State’s legal order after the publication of a Directive, but before its final transposition (judgements of the CJEU in cases Kolpingus Nijmegen BV and Konstantinos Adeneler and others).

Both respecting the legal certainty principle and at the same time the spirit of the Damages Directive, the judgement adapts and interprets the Spanish principle of solidaridad impropia (which allows any damages victim to obtain compensation from any responsible of the tort) to the aims of the directive.

As a result, the court declared that although being responsible for the damages, the responsibility of the leniency applicant was subsidiary, to be activated only in case that the other cartelists could not cover their share.

This is positive news, both for the public and private enforcement of competition law in Spain, since the future of the leniency program is respected whilst at the same time allowing and securing the viability of damages actions in Spain.

Allocation of individual responsibility
Under the umbrella of the doctrine of the solidaridad impropia, another of the defendants argued that following the Spanish NCA decision, the responsibility of each defendant could be allocated easily. They argued that they could not be made to pay more than 2% of the total damages awarded, since according to the sanctioning decision; they only had 2% of the Spanish envelopes market.

Jointly interpreting both the applicable Spanish civil law and the Damages Directive under the mentioned CJEU case law, the judgment dismissed the defendant’s thesis. Under the principle of full compensation enshrined in the directive, the responsibility of the cartelist before the claimant could not be limited to its participation in the infraction, since the cartelists jointly infringed competition rules.

As a result, the defendant was forced jointly and severally along with the other cartelists to pay damages to the claimant (this of course, save for its action to claim compensation from other cartelists is an independent and subsequent action).

The undertaking concept applied to damage claims
Finally, this judgement also clarifies that the competition law concept of undertaking is applicable to civil damage action claims. Which under competition rules might be obvious, but not under Spanish civil and mercantile rules.

This issue was raised by the parent company of one of the cartelists, both sued by the claimants. Their allegation was based on the fact that they were only sanctioned by the Spanish NCA as severally liable, but not individually, and thus they should not be made to pay damages to the claimants.

Again, the court interpreted the Spanish civil law in conjunction with the Damages Directive, and in light of the CJEU’s case law. In this sense, the judgement highlights two issues:

  • That the concept of responsible party of the Spanish Civil Code should be interpreted in conjunction with the Damages Directive and the concept of undertaking that it contains. In this sense, the Barcelona court mentions that the CJEU has interpreted that the concept of undertaking under competition rules goes beyond the limits of a legal entity, and takes into account the economic context and the notion of economic unit enshrined in the case law.
  • Moreover, the court also highlights that the Spanish NCA clearly mentions that the parent company acquired the cartelist company with complete knowledge of their participation in the Spanish envelopes cartel. This meant that the parent company was not only responsible by application of the notion of undertaking under competition rules, but also as a successor of the cartelists companies within their group of companies.

This clarification should be very welcomed by potential claimants in Spain, since it sets a clear line in the interpretation of competition law principles in the framework of damage claims based on Spanish civil law.

More takeaways for potential claimants in Spain
Apart from the procedural takeaways mentioned in our past article, this Barcelona judgement is very positive since it sets the way forward in relation to the way the Mercantile Courts of Barcelona will be interpreting the Spanish harmonized legislation now that the Damages Directive has been transposed.

We believe that this is very important, not only because Barcelona could now be considered a pro-claimant forum, which is good for the private enforcement of EU competition law, but also because they are giving legal certainty to leniency applicants, protecting one of the cornerstones of the public enforcement of EU competition, the leniency program.

As mentioned before, we will be paying close attention to any developments in relation to the forthcoming judgements in relation to the envelopes and the 10 year mandatory real state insurance cartel claims to deliver their most important highlights.