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Brussels, 17 April 2014
Antitrust: Commission proposal for Directive to facilitate damages claims by victims of antitrust violations – frequently asked questions
See also IP/14/455
What are the problems to be solved by this Directive?
Infringements of the EU antitrust rules, such as cartels or abuses of dominant market positions, are liable to cause very serious harm, not only to the economy as a whole but also to particular businesses and citizens. They may, for example, pay higher prices because producers agreed not to compete against each other or lose profits if they are driven out of a market by a dominant company.
These victims are entitled to compensation for the harm they have suffered. They can bring an action for damages before a national court. The EU Court of Justice has emphasised the importance of this right as one of the means of achieving an effective enforcement of EU antitrust rules. However, few claims are made, as it is still difficult to obtain redress in practice.
This is due to shortcomings in the legal frameworks in most Member States that make it excessively costly and difficult to bring antitrust damages actions. In particular, victims may have difficulties in obtaining relevant evidence. Often they do not know within which time limit they can bring an action or to what extent they can rely on decisions of national competition authorities to prove an infringement.
This situation particularly affects citizens and SMEs, who can rarely bear the cost of legal action. Moreover, actions tend to be brought only in a few Member States where the rules are perceived to be more favourable, such as the UK, Germany or the Netherlands. Only 25% of antitrust infringements found by the Commission in the last 7 years have been followed by civil actions for damages. Most of these actions were brought by large businesses. National rules are widely diverging and, as a result, victims are more or less likely to obtain compensation depending on the Member State in which they live or do business.
Moreover, the current lack of rules regulating the interplay between private damages actions and public enforcement leads to significant legal uncertainty and creates unnecessary delays and problems in litigation before national courts. The problems relate to the effect of competition authorities' infringement decisions for follow-on damages actions, the availability of evidence from the file of a competition authority, etc.
What is private enforcement? Will it change the role of the Commission and national competition authorities in finding antitrust infringements?
The notion of private enforcement of the EU antitrust rules refers to legal actions brought by private individuals or businesses before national courts to enforce the rights derived from these rules, including the right to be compensated for harm resulting from an antitrust infringement, e.g. through higher prices or lost profits.
The Directive is aimed at fully compensating those who suffered harm. Unlike in some other jurisdictions, the European approach does not conceive private damages actions as a tool for punishment and deterrence of those who breach antitrust rules. This remains the responsibility of competition authorities, both at the EU and national levels, which find, investigate and sanction infringements in the public interest (public enforcement).
Private and public enforcement are complementary tools: their combination will create a stronger enforcement of EU antitrust rules overall. This is why the Directive includes measures to optimise the interplay between these two tools and to avoid any undue interference of private damages claims with effective public enforcement. Therefore, the key role of the Commission and the national competition authorities as public enforcers of the EU antitrust rules remains unchanged.
What are the main measures put forward in the Directive?
The Directive puts forward a number of measures which will facilitate antitrust damages claims in Member States:
Further, the Directive optimises the interplay between private damages claims and public enforcement, ensuring the full effectiveness of the latter:
The Directive also clarifies that its rules on disclosure of evidence are without prejudice to the rules and practices on: (i) the protection of internal documents of competition authorities and correspondence between competition authorities; and (ii) public access to documents pursuant to the EU's transparency regulation 1049/2001.
Will actions for damages discourage companies from cooperating with the Commission or national competition authorities?
Under leniency programmes, competition authorities establish the conditions under which they will reward companies who admit their participation in a secret cartel and contribute to the investigation in a decisive way by enabling the authority to detect and punish the cartel. To obtain a reduction of fines or immunity from fines under a leniency programme, companies make voluntary statements describing their knowledge of the cartel and their role therein (so-called leniency statements). Some competition authorities also have settlement procedures which enable them to follow a streamlined procedure when companies - having seen the evidence in the file and knowing their exposure and the (reduced) fine range they face - voluntarily acknowledge (in a settlement submission) their participation in an antitrust infringement (typically a cartel) and their concrete liability for it. These tools have become essential instruments to enforce the competition rules at both EU and national level.
Under the Directive, leniency statements and settlement submissions can never be disclosed and used in civil damages actions. The certainty that such self-incriminatory statements will not worsen the legal position of cooperating companies in the context of follow-on antitrust damages actions is essential to maintain the infringers’ incentives to voluntarily cooperate with competition authorities. In any event, the evidence needed by claimants will typically be contained in documents produced in connection with the perpetration of the infringement, i.e. evidence that exists irrespective of any public enforcement proceedings (so-called pre-existing information). The Directive makes it clear that such pre-existing information, whether or not it is also included in the file of a competition authority, can be disclosed at any time.
Further, the Directive safeguards the attractiveness of leniency programmes by providing that that the immunity recipient (i.e. the cartelist which received full immunity from fines) is primarily liable only towards its own customers or providers (see previous question).
The objective of this rule is to protect and even increase the incentives to apply for immunity by preventing that the immunity recipient becomes the preferred target of all follow-on actions, having to compensate upfront for the entire harm caused by the cartel. This risk exists because the infringement decision often becomes final first against the immunity recipient, who is unlikely to appeal the decision.
Importantly, the right of victims to full compensation is not affected by the exemption. Except for the immunity recipient, all other cartelists remain jointly and severally liable towards cartel victims, who can therefore claim from them compensation for the entire harm. And in the very unlikely case that full compensation could not be obtained in this way, the immunity recipient's joint and several liability revives.
These measures are the result of a careful balancing of the victims’ right to obtain full compensation and the effective protection of public enforcement, including the necessary incentives to contribute to it. Even the latter are ultimately in the interest of injured parties, who will suffer less damages and have more opportunities to claim compensation if more cartels are detected and brought to an end.
What is the relationship between the compensation of victims and antitrust fines?
Civil redress for victims obtained through private enforcement (i.e. actions for damages) is meant to compensate those victims for the harm they suffered.
Fines imposed by a competition authority after an investigation in the public interest (public enforcement) are a means of sanctioning infringers for their illegal conduct, and discouraging them, and other potential infringers, from engaging in further infringements.
Compensation and antitrust fines thus pursue different, yet complementary, objectives. Therefore, fines should generally not be lowered if compensation is paid, nor should they be increased if compensation is not paid.
Nevertheless, to stimulate consensual claim resolution, the Directive provides that where an infringer has paid compensation as a result of a consensual settlement, a competition authority may consider this as a mitigating factor in the setting the fine for that infringer.
Are lawsuits before national courts the only way to obtain compensation?
No. Of course, the right to compensation will often be enforced before national courts. The Directive therefore aims at making it easier for victims to enforce their rights through courts by reducing costs and uncertainties.
However, consensual dispute resolution can sometimes be a more efficient and less costly way to settle disputes and obtain compensation. The Directive therefore encourages willing parties to use the means of consensual dispute resolution. It provides for the suspension of limitation periods/pending court proceedings to allow parties sufficient time to reach a consensual settlement, without the risk of losing procedural rights in the meantime. Further, the Directive clarifies the effect of partial consensual settlements (e.g. where a claimant settles with only one of the co-infringers) on subsequent actions for damages. The rules describe how the remaining claim is to be determined, against whom it can be made and how settling and non-settling co-infringers should contribute.
When will the Directive enter into force?
Today's plenary vote, which approved the final compromise text of the proposed Directive, was the final step on the side of the European Parliament. A formal approval of the Parliament's position by the Council will complete the ordinary legislative procedure. Once the Directive has been officially adopted, Member States will have two years to implement the provisions in their legal systems.