Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European Commission Moves Forward on Promoting Private Damages Actions, (Jun 12, 2013)

By Jeffrey May, J.D.

The European Commission (EC) has announced a series of steps taken to facilitate private damages actions by victims of competition law violations. Yesterday, the EC adopted a Proposal for a Directive on antitrust damages actions for breaches of EU competition law. The EC also issued a non-binding recommendation that EU Member States establish procedures for obtaining collective redress.

The proposed Directive is intended to remove a number of practical difficulties which victims frequently face when they try to receive compensation for the damage they have suffered. Its main objectives are: (1) optimizing the interaction between the public and private enforcement of competition law; and (2) ensuring that victims of infringements of the EU competition rules can obtain full compensation for the harm they suffered.

The proposed Directive establishes common EU-wide limits on the disclosure of evidence held in competition authority files to avoid jeopardizing the public enforcement of the competition rules. It prohibits the disclosure of leniency corporate statements and settlement submissions. Other documents prepared by parties for public enforcement proceedings or prepared by a competition authority in the course of its proceedings could be temporarily protected during the pendency of the competition authority proceedings.

With respect to statute of limitations issues, the EC calls for a five-year limitation periods for a damages actions beginning to run on the day on which a continuous or repeated infringement ceases. Where a competition authority opens proceedings into a suspected infringement, the limitations period should be suspended until at least one year after a decision is final or proceedings are otherwise terminated.

The EC also proposes joint and several liability for cartel members. However, it recommends limits on an immunity recipient’s liability.

The proposal also notes that persons who have suffered harm caused by an infringement of the competition rules are entitled to compensation, regardless of whether they are direct or indirect purchasers. Injured parties are entitled to compensation for actual loss and for loss of profit. However, the proposed Directive explicitly recognizes the right to invoke a passing-on defense.

“Contrary to the US system, the proposal does not seek to leave the punishment and deterrence to private litigation,” according to the EC announcement. “Rather, its main objective is to facilitate full and fair compensation for victims once a public authority has found and sanctioned an infringement.”

Recommendation on collective redress. As a complement to the proposed Directive, the EC issued a non-binding recommendation that EU member states set up some form of collective redress in challenges to breaches of EU rules, including EU antitrust rules. The recommendation asks Member States to put in place appropriate measures within two years at the latest.

The systems should enable private individuals and entities to seek injunctive relief and damages in a situation where a large number of persons are harmed by the same illegal practice. Claimants should be required to “opt-in” through directly expressed consent. Further, the EC recommends that Member States prohibit contingency fee arrangements and require that the entities representing claimants be of non-profit character. Without elaborating, the notice states that collective redress “needs to be clearly distinguished from so-called ‘class actions’ that are common under the US legal system.”

News: Antitrust