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.
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.