August 17, 2015
The European Commission ("Commission") has recently introduced a series of amendments to primary legislation and a range of "soft law" guidance notes in relation to its competition law procedures to ensure the smooth functioning of Directive 2014/104/EU on Antitrust Damages Actions (the "Damages Directive"), due to be implemented into national law in 2016 across the European Union.[1]
I. Introduction
The Court of Justice of the European Union has ruled on a number of occasions that any citizen or business has a right to full compensation for the harm caused to them by an infringement of the EU competition (i.e., antitrust) rules.[2]
The right to compensation is, in turn, governed by national rules. The differences between these rules sometimes render it costly and difficult to bring antitrust damages actions,[3] resulting in the vast majority of claims being channelled towards those jurisdictions offering the most developed damages regimes; the most claimant-friendly processes, disclosure rules and legal costs regimes. As a result, the Damages Directive was adopted in November 2014 and entered into force in December 2014.
On 3 July 2015, the Commission announced the introduction of a number of amendments to its antitrust procedural rules in order to enhance the efficacy of the Damages Directive. These changes have been made pursuant to comments received in a public consultation by the Commission.[4] The changes affect Regulation 773/2004 (the "Implementing Regulation")[5] and four connected Notices (the Notices on Access to the File,[6] Leniency,[7] Settlements[8] and Cooperation with national courts[9]). The changes that have been introduced can be analysed in two distinct categories: (i) changes that give effect to the provisions on access and use of information in the Commission’s case file, in a manner which is consistent with the terms of Damages Directive; and (ii) related modifications to the antitrust procedural rules found in the various Notices listed above. The changes became effective as of 4 August 2015.
II. Modifications Related to the Damages Directive
Following the adoption of the Damages Directive, a number of new proposed measures relating to "access to file", governed by Articles 5 to 8 of the Damages Directive, aim to safeguard leniency and settlement submissions so that they are granted protection from disclosure, including these situations where proceedings are brought before the national courts. The policy rationale for this position is clear: insofar as the rules on disclosure introduced by the Damages Directive were to permit the discovery of leniency statements or settlement submissions, this would have a detrimental effect on those entities cooperating under the leniency and settlement programs adopted at EU level and in individual Member States.[10]
Article 15 of the Implementing Regulation, which deals with access to file issues, has been amended to provide explicitly for a specific set of rules for access of the relevant parties to settlement and leniency documents. More specifically, the proposed revised text of Article 15 expressly clarifies that, where settlement discussions have been discontinued with one or more of the parties, such party(ies) shall be granted access to the file in those situations where a Statement of Objections has been issued against them by Commission. In addition, the revised Article 15 now expressly clarifies that the parties and their external representatives cannot copy the leniency corporate statements or settlement submissions by any mechanical or electronic means, regardless of whether or not they propose to settle.
Further, a new Article 16(a) regarding "limitations to the use of information obtained in the course of Commission proceedings" clarifies the scope of the obligation not to use information obtained under the Implementing Regulation beyond the scope of judicial or administrative proceedings related to the application of Articles 101 and 102 TFEU.
More specifically:
- Access to leniency corporate statements and settlement submissions will only be granted for the purposes of exercising the rights of defence in proceedings before the Commission. In addition, such information can be used by the party obtaining access to file only where necessary for the exercise of its rights of defence: (a) before the EU Courts in the context of review of Commission Decisions; or (b) before national courts, but only in those cases relating to the allocation of joint and several liability between undertakings and to the review of Decisions adopted by Competition Authorities acting pursuant to Article 101 TFEU.
- Information prepared by other natural or legal persons specifically for the Commission’s proceedings, as well as information drawn up by the Commission and sent to the parties in the course of its proceedings, can only be used before national courts after the Commission proceedings have been terminated.
With respect to the Leniency Notice, a clarification has been introduced to paragraph 34, according to which any failure to comply with its provisions in the Implementing Regulation on the use of information obtained from access to the file may be regarded as constituting a lack of cooperation with the Commission, thereby potentially leading to the loss of any reduction in fines to which the infringing company might otherwise be entitled under the Commission’s Leniency Notice.
In addition, an amendment has been included in paragraph 48 of the Access to File Notice, according to which any failure to respect the limitations regarding the use of information set out in Article 16(a) of the Implementing Regulation might be subject to penalties under national law. The latter possibility has also been introduced in the text of the Leniency Notice.[11]
Finally, paragraph 26(a) of the amended Notice on Cooperation with National Courts provides that no corporate statement for leniency or settlement submissions will be disclosed by the Commission to national courts.[12] Paragraph 26(b) of the Notice on Cooperation with National Courts also foresees that the Commission will not transmit to national courts: (i) information prepared specifically for the Commission proceedings; and (ii) information drawn up by the Commission and sent to the parties in the course of the Commission proceedings, before they have been terminated against all the investigated entities. In addition, a broader new provision has been introduced in the text of paragraph 26 seeking to ensure that the disclosure of documents (other from those referred to above) to national courts does not unduly affect the effectiveness of the enforcement of EU competition law, e.g., in relation to pending investigations and to the functioning of the Commission’s leniency and settlement programs.
III. Modifications Unrelated to the Damages Directive
In addition, the amendments incorporate into the Implementing Regulation the general principles applicable to the respective immunity and leniency processes, as currently set forth in the Leniency Notice. While these changes do not appear to be directly related to the provisions of the Damages Directive, they nonetheless constitute part of the Commission’s efforts to ensure: (i) internal consistency among the various "hard" law (i.e., primary legislation such as the Regulation) and "soft" law (i.e., guidance in the form of Notices) legal instruments setting out the procedural framework regarding Articles 101 and 102 TFEU; and (ii) an implementation which is as effective as possible for the pursuit of its leniency and settlement programs.
IV. Conclusions
The Commission’s proposed amendments will generally be welcomed by the Brussels antitrust bar. Moreover, in a number of cases, the changes do no more than codify the approach that has already been adopted in practice. Without these amendments, the Implementing Regulation and its accompanying Notices would contain rules that might arguably depart from the various disclosure provisions in the Damages Directive. The Commission thus believes that these amendments will give impetus to the harmonization process and alignment of public enforcement and private damage actions rules as enshrined in the Damages Directive.
Finally, to the extent that the amendments protect from disclosure oral statements for leniency, these reforms align the Commission’s Leniency Program with the International Competition Network’s Guidance on "Drafting and Implementing an Effective Leniency Policy", according to which "[t]he protection of leniency information or evidence is necessary to allay fears that such information or evidence may be used against the leniency applicant in private civil actions or shared with another government agency, foreign or domestic, which may use that information or evidence against the applicant without providing leniency."[13]
[1] See European Parliament and Council Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, OJ L 349, 5.12.2014, p. 1, available at:
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0104&from=EN. Member States are to implement the Directive in their legal systems by 27 December 2016.
[2] See Cases C-453/99 Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others [2001] ECR I-6297 and Case C-295/04 Manfredi v Loyd Adriatico Assicurazioni SpA [2006] ECR I-6619.
[3] See views of the European Commission in "Towards More Effective Antitrust Damages Actions in Europe", available at: http://ec.europa.eu/competition/antitrust/actionsdamages/index.html.
[4] See Commission, Consultation on proposed modifications to Regulation 773/2004 and the Notices on Access to the File, Leniency, Settlements and Cooperation with national courts, replies available at: http://ec.europa.eu/competition/consultations/2014_regulation_773_2004/index_en.html#replies.
[5] See Commission Regulation (EU) 2015/1348 of 3 August 2015 amending Regulation (EC) No 773/2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty, OJ L 208, 5.8.2015, p. 3-6, available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2015.208.01.0003.01.ENG. See also Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty, OJ L 123, 27.4.2004, pp. 18-24, available at: http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32004R0773.
[6] See Communication from the Commission — Amendments to the Commission Notice on the rules for access to the Commission file in cases pursuant to Articles 81 and 82 of the EC Treaty, Articles 53, 54 and 57 of the EEA Agreement and Council Regulation (EC) No 139/2004, OJ C 256, 5.8.2015, pp. 3-4, available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2015.256.01.0003.01.ENG. See also Commission Notice on the rules for access to the Commission file in cases pursuant to Articles 81 and 82 of the EC Treaty, Articles 53, 54 and 57 of the EEA Agreement and Council Regulation (EC) No 139/2004, OJ C 325, 22.12.2005, p. 7-15 (the "Access to File Notice"), available at: http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52005XC1222(03).
[7] See Communication from the Commission — Amendments to the Commission Notice on Immunity from fines and reduction of fines in cartel cases, OJ C 256, 5.8.2015, pp. 1-1, available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2015.256.01.0001.01.ENG. See also, Commission Notice on Immunity from fines and reduction of fines in cartel cases, OJ C 298, 8.12.2006, p. 17-22 (the "Leniency Notice"), available at: http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52006XC1208(04).
[8] See Communication from the Commission — Amendments to the Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 and Article 23 of Council Regulation (EC) No 1/2003 in cartel cases, OJ C 256, 5.8.2015, pp. 2-2, available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2015.256.01.0002.01.ENG. See also Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 and Article 23 of Council Regulation (EC) No 1/2003 in cartel cases, OJ C 167, 2.7.2008, p. 1-6 (the "Settlements Notice"), available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:167:0001:0006:EN:PDF.
[9] See Communication from the Commission — Amendments to the Commission Notice on the cooperation between the Commission and courts of the EU Member States in the application of Articles 81 and 82 EC, OJ C 256, 5.8.2015, pp. 5-5, available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2015.256.01.0005.01.ENG. See also Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC, OJ C 101, 27.4.2004, p. 54-64 (the "Notice on Cooperation with National Courts"), available at: http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52004XC0427(03).
[10] See Damages Directive, at Recital 26, according to which: "[u]ndertakings might be deterred from cooperating with competition authorities under leniency programmes and settlement procedures if self-incriminating statements such as leniency statements and settlement submissions, which are produced for the sole purpose of cooperating with the competition authorities, were to be disclosed".
[11] See Leniency Notice, at paragraph 34 (as amended).
[12] Similarly, paragraph 35(a) has been added to the Leniency Notice, pursuant to which the Commission will not transmit at any time leniency corporate statements to national courts for use in damages actions. With respect to the Settlements Notice, changes have been introduced to paragraphs 39, which now provides that the Commission will not at any time transmit settlement submissions to national courts for use in such actions.
[13] See International Competition Network, Anti-Cartel Enforcement Manual. Drafting and Implementing an Effective Leniency Policy, April 2014, available at: http://www.icnmarrakech2014.ma/pdf/Intl-ICN-Anti-cartel_enforcement_manual.pdf.
Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work or the authors in the firm’s Brussels office:
Peter Alexiadis (+32 2 554 72 00, [email protected])
Pablo Figueroa (+32 2 554 72 07, [email protected])
Elissavet Kazili (+32 2 554 72 01, [email protected])
Please also feel free to contact any of the following leaders and members of the firm’s Antitrust and Competition practice group:
Brussels
Peter Alexiadis (+32 2 554 72 00, [email protected])
David Wood (+32 2 554 72 10, [email protected])
Andrés Font Galarza (+32 2 554 72 30, [email protected])
Jens-Olrik Murach (+32 2 554 72 40, [email protected])
Daniel G. Swanson (+1 213-229-7430, [email protected])
London
Philip Rocher (+44 20 7071 4202, [email protected])
Charles Falconer (+44 20 7071 4270, [email protected])
Ali Nikpay (+44 20 7071 4273, [email protected])
Patrick Doris (+44 20 7071 4276, [email protected])
Deirdre Taylor (+44 20 7071 4274, [email protected])
Munich
Michael Walther (+49 89 189 33-180, [email protected])
Jens-Olrik Murach (+32 2 554 72 40, [email protected])
Kai Gesing (+49 89 189 33 180, [email protected])
Hong Kong
Kelly Austin (+852 2214 3788, [email protected])
Washington, D.C.
Scott D. Hammond (+1 202-887-3684, [email protected])
F. Joseph Warin (+1 202-887-3609, [email protected])
D. Jarrett Arp (+1 202-955-8678, [email protected])
David P. Burns (+1 202-887-3786, [email protected])
David Debold (+1 202-955-8551, [email protected])
Cynthia Richman (+1 202-955-8234, [email protected])
New York
Peter Sullivan (+1 212-351-5370, [email protected])
Lawrence J. Zweifach (+1 212-351-2625, [email protected])
Los Angeles
Daniel G. Swanson (+1 213-229-7430, [email protected])
Rod J. Stone (+1 213-229-7256, [email protected])
Samuel G. Liversidge (+1 213-229-7420, [email protected])
Jay P. Srinivasan (+1 213-229-7296, [email protected])
Sarretta C. McDonough (+1 213-229-7227, [email protected])
San Francisco
Gary R. Spratling (+1 415-393-8222, [email protected])
Joel S. Sanders (+1 415-393-8268, [email protected])
Trey Nicoud (+1 415-393-8308, [email protected])
Rachel S. Brass (+1 415-393-8293, [email protected])
Dallas
Brian Robison (+1 214-698-3370, [email protected])
Veronica S. Lewis (+1 214-698-3320, [email protected])
Denver
Gregory J. Kerwin (+1 303-298-5739, [email protected])
Richard H. Cunningham (+1 303-298-5752, [email protected])
© 2015 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice