We have previously reported on the EU Commission’s efforts to harmonise the rights of cartel victims seeking damages. Access to these rights was being hampered by slow implementation of the EU Damages Directive, but it now seems that the major jurisdictions have nearly all brought the rules into force.
The Parliament has now passed the necessary bill and the new rules will come into force in Q2 2017 once the bill has been ratified by the Bundesrat and signed by the President, both of which are a formality in this case. Most rules will apply to claims arising on or after the date the Directive should have been implemented, namely 27 December 2016, others to actions newly filed, while the limitation provisions will cover some claims which arose before that date (as explained below).
The “follow-on” damages regime was already well-established in Germany, but the following provisions of the directive represent an extension of claimants’ rights:
- There is a new pre-trial discovery process to allow claimants to access certain categories of documents, but not “leniency applications”. Potential claimants may bring proportionate requests even before issuing a full claim, but the new law requires them to meet the costs of the disclosure exercise – a step which goes beyond the directive.
- Limitation periods are extended from three years to five (the minimum under the directive). Although the directive’s detailed provisions on limitation will not “revive” claims already expired, the longer period will automatically apply to any claim which was not yet out of time when the reform takes effect, meaning that they will benefit from the extension.
- Indirect purchasers have right of standing and may benefit from a rebuttable presumption that harm was passed on by the direct purchasers.
- Courts are bound by a finding of the competition authority that there was an infringement, and will presume that a cartel produced harm (unless the defendants can prove otherwise). Decisions of the European Commission, the Bundeskartellamt and of national competition authorities or courts of other EU member states all have binding effect on German courts.
- Co-conspirators are jointly and severally liable to cartel victims, with some carve-outs available for small- and medium-sized companies and leniency recipients.
Ordinance no. 2017-303 and Decree no. 2017-305 implementing the Directive came into force on 10 March 2017. Some of the new procedural rules related to the provision of evidence are applicable to claims which had been introduced as of 26 December 2014.
The new “follow-on” damages regime is a major step for the French legal framework, which previously had no specific rules for those claims (although follow-on claims could be brought before French courts based on civil tort law).
The Ordinance is implementing significant changes, as follows:
- Apart from follow on claims based on practices prohibited under Articles 101 (cartels) and 102 (abuse of a dominant position) of the TFEU and the equivalent provisions under French law (Art. L. 420-1 and L. 420-2 of the Code of commerce), the French follow-on regime is also applicable to specific French law prohibitions related to abuse of economic dependency, agreements on exclusive overseas import rights, agreements and practices in the transport sector and abusively low pricing practices.
- An anti-competitive practice is deemed to be irrefutably established under the French regime if the infringement is found by a decision which cannot be overruled through “ordinary review“, which is slightly different from the presumption set out in the Directive that relates to “final decisions” of the national competition authority.
- The law sets out criteria for ascertaining the contribution of each participant in the anti-competitive practice, reflecting the directive’s provisions that co-conspirators are jointly liable to cartel victims, with some carve-outs available for small- and medium-sized companies and leniency recipients.
- The reinforcement of a judge’s power to order the production of documents in the new law will make the use of documents from a case handled by the French Competition Authority to evidence a claim for damages much easier than at present.
United Kingdom (jurisdiction of England and Wales)
The draft legislation for the UK published in December was finally passed on 8 March 2017 and the Regulations came into force the following day.
Most of the directive’s provisions are already commonplace in England and Wales, but there will be some changes to bring the regime fully in line, namely:
- The question of whether documents relating to “leniency” or “settlement” with the Commission can be disclosed has been resolved: they will be exempt from the jurisdiction’s otherwise wide-ranging disclosure rules.
- Claimants will not be able to claim “exemplary” damages for claims covered by the new regime: although it was rare for the English courts to award damages which exceeded pure compensation, such damages were previously theoretically available, particularly where a defendant had not been fined by the competition authorities.
- The date from which limitation runs in follow-on claims is now expressly defined as the date when the claimant knows that the cartelist’s behaviour “constitutes an infringement of competition law”, which is likely to mean the date of the infringement decision of the competition authority. In practice the impact of this particular definition is likely to be limited, but the introduction of two formal “suspension” periods by the directive is new. This means that the limitation period will not run:
- during an investigation by a national or EU competition authority; or
- during any period in which the parties pursue “Consensual Dispute Resolution” (CDR), which may be arbitration, mediation, or any other form of binding dispute resolution.
- In addition to these provisions of the directive, limitation will also be suspended whilst an application for a “collective proceedings order” is considered, to avoid claimants losing their right to bring individual actions following an unsuccessful application, where limitation might have expired in the meantime.
- Defendants who settle their claims using CDR will also be protected from contribution claims by other defendants ordered to pay damages by the court – an incentive to settle rather than proceed to trial.
The new rules are subject to transitional provisions which mean that their effect will only gradually begin to be felt. In particular, the new rules on limitation, CDR and contribution claims will only apply to claims where the damage arose on or after 10 March 2017, which may not come to court for years from now. The new disclosure rules will apply to claims issued on or after this date.
The rest of the EU
As we reported in February, the European Commission has sent formal reminders to those Member States that have yet to implement the Directive, which include (among others) Spain, Portugal and Greece at time of writing. The Netherlands, Italy and the Scandinavian members have all implemented the directive.