The new directive introduces rules to make it more attractive for claimants to bring private damages claims whilst ensuring that: (i) companies are not incentivised to bring vexatious claims and abusive litigation; and (ii) the risk of claims does not deter applicants under the Commission’s leniency programme. This programme is fundamental to the Commission’s detection and prosecution of antitrust/competition law infringements – in excess of 85 per cent of the Commission’s cartel cases have been triggered by leniency applications. The EU has accordingly taken a cautious approach; in particular, the EU has rejected the adoption of a US-style “opt-out” class action system.
The main provisions of the directive are as follows.
Passing-on – the position of indirect purchasers
The directive confirms that indirect purchasers are entitled to issue proceedings directly against a cartel to recover loss suffered even though they did not directly contract with any of the cartelists. From a policy perspective, it makes sense that any person that suffered loss as a result of anti-competitive conduct should be able to claim against those responsible for that loss regardless of where that person sits in the supply chain.
The directive goes one step further, by introducing a presumption that an overcharge levied on a supplier/direct purchaser was passed on to an indirect purchaser (i.e., that the direct purchaser did not absorb the overcharge) although the indirect purchaser will need to prove the extent of the overcharge that was passed on and the loss suffered.4 This approach is a double-edged sword for claimants, as a defendant can benefit from the passing-on defence if it is able to demonstrate that a claimant in turn passed on the overcharge to its own customers rather than absorbing it.
Precedent effect of infringement decisions
The directive provides that an infringement decision of a national competition authority of one Member State can be presented as evidence of an infringement before a court in another Member State. Although the EU has retreated from the Commission’s original position that such decisions would be legally binding across the EU, an infringement decision of a national competition authority is likely to be very persuasive before a court in another Member State.5 Decisions of the EU Commission are already binding on the courts of Member States.6
Presumption of harm
Controversially, the directive introduces a rebuttable presumption that cartels cause harm. The directive envisages that courts in EU Member States will have the power to estimate the amount of loss suffered if it is established that a claimant suffered loss but the exact amount of loss suffered is excessively difficult to quantify.7 This presumption does not however prevent defendants adducing evidence that the competition law infringement had no effect on the claimant.
Joint and several liability
The directive requires Member States to introduce rules that cartelists are jointly and severally liable for all of the loss caused by the cartel, which means that a claimant can recover its entire loss from a single cartelist (subject to the exemption described below). This position is already recognised by the English courts and is one of the features of the UK regime that has made it attractive to claimants.8
However, a company that has been granted immunity under a leniency programme (i.e., a 100 per cent reduction on fines) will be exempt from this general rule and will not be jointly and severally liable for the entire harm caused by the cartel; they will only be liable for loss concerning their own sales. This exception is designed to avoid discouraging potential immunity applicants and indeed provides a further incentive to apply for immunity. The immunity applicant is an obvious target for bringing a claim as it has admitted liability and will not therefore be able to appeal against the infringement decision and rely on on-going proceedings to delay determination of damages claims. At present, this means that immunity applicants are often front and centre in damages claims, needing to pursue their fellow cartelists for a contribution to any damages awarded. Going forward, immunity applicants will be a significantly less attractive target for potential claimants.9
Protection from contribution claims for settling defendants
A defendant that settles a claim will be protected from contribution claims by co-defendants that subsequently settle or that are subject to damages awards.10 Thus, a non-settling co-defendant cannot come after a defendant that has already settled for a further payment. The effect of this provision will be to increase the incentives on defendants to settle early, as there will be a prospect of getting out of litigation early at a lower cost for their share of the losses caused by a cartel infringement.
Disclosure – access to evidence
The directive requires Member States to introduce a disclosure regime whereby cartelists will be required to disclose relevant evidence to claimants. The lack of available evidence has been cited by the Commission as one of the key obstacles facing victims of cartel conduct in bringing claims. Disclosure is not a new phenomenon in damages claims - for example, the UK has a well-established disclosure regime that exceeds the requirements of the directive and provides broad access to relevant documents.11
The directive’s disclosure requirement is not absolute; a defendant to a competition/antitrust damages claim will not be required to disclose self-incriminating leniency statements or settlement statements (although the documents which accompany those statements will be disclosable - confirming the position established on this issue in Pfleiderer12 and National Grid13). This approach is designed to ensure that leniency applicants and settlement parties are not disadvantaged as compared to the other infringing parties in private litigation.14