Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC applauds adoption of directive on antitrust damage actions, (Nov 10, 2014)

By Linda O’Brien, J.D., LL.M.

In an announcement issued today, the European Commission (EC) applauded the formal adoption of its proposal for a Directive on antitrust damages actions by the European Union (EU) Council of Ministers. The Directive will help citizens and companies claim damages if they are victims of infringements of EU antitrust rules, such as cartels or abuses of dominant market positions.

Among other things, it will give victims easier access to evidence they need to prove the damage suffered and more time to make their claims. The Directive is designed to achieve a more effective enforcement of the EU antitrust rules overall: it will fine-tune the interplay between private damages claims and public enforcement, and preserve the attractiveness of tools used by European and national competition authorities, in particular leniency and settlement programs.

The Directive is based on a proposal submitted by the EC to the Parliament and Council in June 2013. Informal meetings were launched in February 2014 to achieve a political compromise. In April, the European Parliament had approved a compromise text of the Commission's initial proposal.

The EU Court of Justice has acknowledged the right for victims of antitrust infringements to be compensated for the harm suffered. However, due to national procedural obstacles and legal uncertainty, few victims currently obtain compensation. Moreover, national rules are widely diverging across Europe; as a result, the chances of victims to obtain compensation greatly depend on which Member State they happen to live in.

The main improvements introduced by the Directive include: (1) national courts can order companies to disclose evidence when victims claim compensation; (2) a final decision of a national competition authority finding an infringement will automatically constitute proof of that infringement before courts of the same Member State in which the infringement occurred; (3) victims will have at least one year to claim damages once an infringement decision by a competition authority has become final; (4) 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; and (5) consensual settlements between victims and infringing companies will be made easier by clarifying their interplay with court actions.

Private damages actions before courts and public enforcement of antitrust rules by competition authorities are complementary tools, the EC noted. The Directive seeks to fine-tune the interplay between them and ensure that while victims are fully compensated, the key role of competition authorities in investigating and sanctioning infringements is preserved. In particular, cooperation between companies and competition authorities under so-called "leniency" programs plays a key role in detecting infringements. The Directive therefore contains safeguards to ensure that facilitating damages actions does not reduce companies' incentives to cooperate with competition authorities.

The Directive is expected to be formally signed during the Parliament's plenary session at the end of November. It will then be published in the EU Official Journal and will enter into force 20 days after its publication. Member States will have two years to implement it.

The EC will proactively assist Member States in their implementation efforts. Furthermore, as required by the Directive and to assist national courts and parties to antitrust damages actions, the Commission will draft guidelines on the passing-on of overcharges. The Commission will also review the Directive and submit a report to the Parliament and the Council in six years from the entry into force.

The Commission's 2013 Recommendation on collective redress invited Member States to introduce collective actions by July 2015, including actions for damages, in line with the principles set out in the Recommendation. The availability of collective damages actions is particularly important for consumers harmed by antitrust violations. As the Directive applies to any damages actions in the antitrust field, it applies also to collective actions in those Member States where they are available.

"We need a more robust competition culture in Europe,” said EU Commissioner in charge of competition policy Margrethe Vestager. “So I am very glad that the Council has now also formally approved the Directive on antitrust damages actions. I am very pleased that it will be easier for European citizens and companies to receive effective compensation for harm caused by antitrust violations."

News: Antitrust