LawFlash

EU Issues Cartel Damages Directive

November 17, 2014

The directive eases the way for the private enforcement of competition laws in Europe.

On November 10, the European Council adopted a directive designed to make it easier for injured parties to pursue damages claims in European Union (EU) Member State courts for breach of EU antitrust rules. The directive reconfirms the right to full compensation under EU law for any injuries suffered as a result of such violations and provides for legal presumptions of harm and the passing-on of overcharges to lower levels of the supply chain.

EU Member States will have two years from the directive’s publication date in the Official Journal of the European Union to adapt their national laws. The new rules will likely affect how damages claims will be pursued regarding antitrust cases currently pending before the competition authorities.

The directive includes provisions on the (i) disclosure of evidence, (ii) effects of national decisions, (iii) limitation periods, (iv) joint and several liability, (v) passing-on of overcharges, (vi) quantification of harm, and (vii) consensual dispute resolution. To date, differences among EU Member States in procedural laws have acted as a break to damages actions. The directive’s purpose is to introduce a procedural framework that enables injured parties to take legal action before national courts.

Crucial for plaintiffs is that the directive requires the Member States to establish a rebuttable presumption that cartel infringements cause harm and provide the national courts with the power to estimate the amount of harm, if it has been established that a claimant suffered harm. For defendants, the Member States must provide for the passing-on defense and give the national courts the power to estimate which share of any overcharge was passed on under their national procedures.

The EU’s efforts to provide enhanced private antitrust enforcement tools before Member States courts will introduce alien legal principles (such as document disclosure) for many continental jurisdictions. Moreover, in light of the irrefutability of the European Commission’s and domestic antitrust authorities’ infringement decisions and the presumption of harm, it will be interesting to track the longer-term effect of the directive on the EU and national leniency processes. Companies involved in anticompetitive behavior may take a longer and harder look at the risks of follow-on actions before rushing in to make leniency applications in which they accept guilt.

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