Actions for Damages for Breaches of Antitrust Law – The Road Ahead

→ Hanno Wollmann

The private enforcement of competition rules, in particular through damages actions, is one of the major trends in the application of European antitrust law. The following essay reports on the European Commission’s initiatives in this field and puts them into the perspective of national developments in Austria.

The EC’s roadmap to promote antitrust damage actions

Every year, the Euro­pean Com­mis­sion (EC) pub­lish­es a work pro­gramme for the next year. The cur­rent work pro­gramme for 2012 includes a leg­isla­tive ini­tia­tive on actions for dam­ages for breach­es of antitrust law which has two main objec­tives. First, it wants to clar­i­fy the inter­re­la­tion of such pri­vate actions with pub­lic enforce­ment by the EC and the Nation­al Com­pe­ti­tion Author­i­ties of the Mem­ber States (NCA), notably as regards the pro­tec­tion of lenien­cy pro­grammes. Sec­ond, it aims to ensure effec­tive dam­ages actions before nation­al courts.

Actions for damages and leniency

There is an obvi­ous ten­sion between lenien­cy pro­grammes and pri­vate antitrust enforce­ment. As the Heads of the NCA observed in a res­o­lu­tion of 23 May 2012, the effec­tive­ness of lenien­cy pro­grammes cru­cial­ly depends on the incen­tives that those pro­grammes offer to poten­tial appli­cants to coop­er­ate with the com­pe­ti­tion author­i­ties. While the most impor­tant incen­tive is immu­ni­ty from (or reduc­tion of) penal­ties, lenien­cy appli­cants will also con­sid­er the impact coop­er­a­tion will have on their posi­tion in civ­il pro­ceed­ings. If a poten­tial appli­cant faces a strong like­li­hood that the mate­r­i­al sub­mit­ted by him for pub­lic enforce­ment will be used against him in civ­il pro­ceed­ings, he is less like­ly to step for­ward.

Aus­tria is one of the EU juris­dic­tions that illus­trate such con­cerns. The Aus­tri­an ele­va­tor car­tel case (in which fines of ca EUR 75 mio were imposed; see Supreme Court 16 Ok ⁵⁄₀₈) was ini­ti­at­ed by a lenien­cy appli­ca­tion. While this step per­mit­ted the appli­cant to escape fines, the lenien­cy mate­r­i­al was sub­se­quent­ly dis­closed to pri­vate claimants (by way of crim­i­nal pros­e­cu­tion against the indi­vid­u­als involved in the infringe­ments; see Supreme Court 16 Ok ³⁄₁₀). Ulti­mate­ly, it formed the basis for two dozen dam­ages actions before Aus­tri­an civ­il courts, with a total amount in dis­pute of ca EUR 220 mio.

To pre­serve the effec­tive­ness of their antitrust activ­i­ties, the EC and the NCA unan­i­mous­ly call for pro­tec­tion of lenien­cy mate­ri­als against dis­clo­sure in civ­il pro­ceed­ings. It would be naïve, how­ev­er, for under­tak­ings to believe in such pro­tec­tion. Lenien­cy is an enforce­ment instru­ment. Its objec­tive is to uncov­er seri­ous infringe­ments of com­pe­ti­tion rules. The respec­tive deci­sions will form the pri­ma­ry basis for dam­age awards in fol­low-on lit­i­ga­tion. Against this back­ground, and with a view to the increas­ing the ten­den­cy for injured par­ties to request dam­ages, a lenien­cy appli­cant must nowa­days be pre­pared to com­pen­sate his cus­tomers. Pay­ment of repa­ra­tion is part of the game. Whether or not lenien­cy mate­r­i­al is for­mal­ly dis­closed does – in prac­tice — not make much of a dif­fer­ence.

A fully effective legal framework for damages actions

Since the famous deci­sion of the ECJ in Courage Cre­han (C‑453/99), it is recog­nised that any EU cit­i­zen who suf­fers harm as a result of a breach of Arti­cles 101 and 102 TFEU must be able to obtain repa­ra­tion from the par­ty who caused the harm. In order to pro­mote an effec­tive legal frame­work to obtain com­pen­sa­tion, the EC’s ini­tia­tive focus­es on the fol­low­ing aspects:

• access to evi­dence (“dis­cov­ery”);
• bind­ing effect of deci­sions of NCA and the EC as proof of an antitrust infringe­ment in civ­il pro­ceed­ings;
• har­monised rules on whether defen­dants can invoke that the claimant passed the dam­age on to his own cus­tomers;
• har­monised rules on stand­ing, in par­tic­u­lar for indi­rect pur­chasers;
  col­lec­tive redress; and
• statute of lim­i­ta­tions.

At least two of those six aspects are high­ly con­tro­ver­sial: access to evi­dence and col­lec­tive redress. Both are issues not unique to com­pe­ti­tion law cas­es, going to the very heart of civ­il pro­ceed­ings. Any attempt of the EC to har­monise nation­al pro­ce­dur­al rules in this respect would be a far-reach­ing inter­ven­tion into the mem­ber states’ judi­cial sys­tems and fits ill into the prin­ci­ple of sub­sidiar­i­ty. On that account, no quick devel­op­ments are to be expect­ed here.

With regard to the oth­er aspects, the announce­ment of the EC ini­tia­tive has already trig­gered a reac­tion on the nation­al lev­el, which works to facil­i­tate dam­age actions. This trend is appar­ent from both court deci­sions and nation­al leg­is­la­tion. In Aus­tria, for instance, 2012 brought a num­ber of land­mark deci­sions of the Supreme Court sup­port­ing antitrust dam­age claims, while at the same time look­ing for a bal­ance with the estab­lished prin­ci­ples of tort law.

In 5 Ob 39/11p, the Supreme Court con­firmed that the mem­bers of a car­tel are joint­ly liable to com­pen­sate the harm suf­fered by their cus­tomers. In 4 Ob 46/12m, the Supreme Court indi­cat­ed that the statute of lim­i­ta­tions for a fol­low-on action will usu­al­ly only start once the final deci­sion of the com­pe­tent NCA was pub­lished. In 7 Ob 48/12b, the Supreme Court held that, despite the quest for effi­cient enforce­ment, antitrust dam­ages actions need to be con­clu­sive; if a claimant argues that the prices he paid were high­er than they would have been with­out the infringe­ment, the bur­den of proof con­cern­ing pay­ments made by him in the past rests exclu­sive­ly on him. In 4 Ob 46/12m and 7 Ob 48/12b, the Supreme Court ruled that indi­rect pur­chasers will have a dam­age claim if they can show that the dam­age inflict­ed upon their sup­pli­er was passed on to them. And final­ly, in 7 Ob 48/12b, the court ruled that Aus­tri­an law does not sup­port dam­age claims that result from an “umbrel­la effect”, and request­ed a pre­lim­i­nary rul­ing from the ECJ whether this is in line with the Euro­pean prin­ci­ple of effec­tive­ness. Tak­ing all this togeth­er, it seems that much of what the EC intends to put into the pro­posed direc­tive has already been imple­ment­ed on the nation­al lev­el, based on tra­di­tion­al prin­ci­ples of tort law.

In addi­tion, the Aus­tri­an leg­is­la­tor intends to pro­mote pri­vate dam­ages actions. In an upcom­ing amend­ment to the Car­tel Act, which will enter into force on 1 March 2013, a spe­cial rule (§ 37a) will be passed that specif­i­cal­ly deals with antitrust dam­ages. The pro­posed new arti­cle (which strong­ly builds on § 33 GWB) deals with the statute of lim­i­ta­tions, the bind­ing nature of NCA deci­sions, the pos­si­bil­i­ty for the civ­il courts to stay their pro­ceed­ings as long as pub­lic enforce­ment is under way, and the pay­ment of inter­est on antitrust dam­ages. It also con­tains a rule that dam­ages for antitrust infringe­ments may not be exclud­ed just because the claimant sold the prod­uct to some­one else.

Conclusion

The pri­vate enforce­ment of antitrust dam­ages has become a real­i­ty, not only in liti­gious coun­tries such as the UK. On the road ahead, we will see much more lit­i­ga­tion in this field. The sup­port­ive stance of the EC should not dis­guise, how­ev­er, that dam­age actions of this kind are not easy to enter­tain. They will usu­al­ly raise com­plex ques­tions of fact which, even in a har­monised legal envi­ron­ment, will be dif­fi­cult to solve in indi­vid­ual cas­es. These dif­fi­cul­ties stem from the fact that it is impos­si­ble to pre­cise­ly cal­cu­late the result of effec­tive com­pe­ti­tion. On that account, it is still chal­leng­ing to find appro­pri­ate bench­marks for estab­lished tort prin­ci­ples such as causal­i­ty or loss of prof­it. Nev­er­the­less, it is to be expect­ed that courts in all mem­ber states (includ­ing Aus­tria) will be pre­pared to award antitrust dam­ages on the basis of rea­son­able assess­ments.

The private enforcement of antitrust damages has become a reality, not only in litigious countries such as the UK. On the road ahead, we will see much more litigation in this field. More than ever before, the business world needs to focus to avoid serious infringements of competition rules.