November 14, 2014
The EU levels the playing field for antitrust damages across the Member States, drives its members towards the UK model, and saves its most far-reaching provisions for the protection of its leniency regime.
As part of its emphasis on the need to enhance deterrence against antitrust violations, the European Commission has over the past decade been fine-tuning proposals to create an effective European private enforcement regime through the pursuit of damages actions before European Union ("EU") Member State courts. The approval by the European Parliament on 17 April 2014 of a new Directive on Private Damages Actions in Competition Law (the "Directive"), which was signed by the European Council of Ministers on 10 November 2014, seeks to establish a less fragmented regime for the pursuit of such actions across the 28 Member States of the EU.
Until now, the lack of a uniform framework for private damages actions under competition rules had created great uncertainty among the antitrust Bar, and more importantly, among potential claimants considering which jurisdictions might offer fertile territory for antitrust damages actions. The European Commission concluded, as far back as 2005, that claimants were being confronted with significant evidentiary burdens, uncertainty in potential outcomes and various risks associated with the rejection of an action for damages (especially as regards adverse orders to bear the legal costs of one’s opponent).
The net effect of these uncertainties was arguably to dis-incentivise private actions in antitrust cases in certain jurisdictions, and to channel the vast majority of claims towards those jurisdictions with the most developed damages regimes, and those seen as offering the most claimant-friendly process, disclosure rules or legal costs regime. In some cases, this led to cases better suited to one jurisdiction being shoehorned into litigation before the courts of another Member State.
The overarching aim of the Directive is to approximate the procedural rules of national courts in relation to damages actions based on the infringement of EU or national competition rules. The Directive seeks to make it more straightforward for victims of anti-competitive conduct across the EU to obtain compensation. It sets out minimum standards to achieve its goals, while leaving it open to Member States to introduce measures that might go beyond the prescribed standard in the Directive, provided that they are consistent with the Directive’s aims. The 28 EU Member States have two years to transpose the Directive into national law. While that process often leads to a patchwork of implementation across the Member States, it is the clear intention of the EU to secure a high degree of uniformity.
Observers of the British legal system will note a close conceptual resemblance between the new Directive and the established UK model of cartel damages claims, although there are some important differences. It is therefore to be expected that the UK will remain a preferred forum for damages claims within the EU.
Key Legal Elements
The new Directive introduces a number of important common elements into the legal regimes of the EU Member States which regulate private antitrust enforcement actions, including the following:
Some justification can clearly be claimed for this view. However, it is open to question whether the approach is a principled one, and it may face challenge on EU fundamental rights grounds, or under Article 6 of the European Convention on Human Rights, if parties to litigation are prevented from obtaining non-privileged documents which are critical to their ability to pursue their case and which they would, absent the Directive, otherwise be entitled to see under domestic law.
The Directive stipulates that compensation for actual loss at any level of the supply chain should not exceed the overcharge harm suffered at that level, which is presumably intended to address this risk. However, the Directive offers no further detail on how this safeguard would operate. Greater clarity will hopefully emerge as the Directive requires the Commission to issue guidance to national courts on how to estimate the share of overcharge passed to indirect purchasers.
The Directive provides that defendants should be able to recover a contribution from any other infringer. However, this is subject to the limitation that the amount of contribution of an infringer which has been granted immunity from fines under a leniency programme shall not exceed the amount of the harm it caused to its own direct or indirect purchasers or providers.
Member States will have two years from the adoption of the Directive to implement the relevant provisions into their national legal systems, and there is already speculation that some Member States might be less than enthusiastic implementers. Moreover, because the Directive merely establishes a set of minimum standards that Member States should implement, the possibility remains that material differences among Member State litigation enforcement regimes will continue to exist.
Those differences will be compounded by the fact that each Member State will need to transpose this directive in a manner sensitive to the peculiarities of its own law of tort/delict and its own civil procedure rules. Indeed, any parties which have infringed competition law through joint behaviour are to be jointly and severally liable for the infringement. In a cartel context, this approach plainly serves the interests of justice. It is open to question whether justice will consistently be served by imposing liability for the totality of any harm caused to a third party by a vertical agreement between one very powerful party and one less powerful undertaking, particularly in circumstances of marked inequality of bargaining power. For example, the various rebuttable presumptions established by the Directive operate differently in the legal systems of the Member States, the practical significance of which depends on the requisite legal standard for rebutting such presumptions in each Member State, and even the extent to which a Member State operates a concept of "burden of proof" in civil proceedings.
The Directive is therefore unlikely to bring a complete end to the current practice of "forum-shopping" by antitrust damages claimants, especially when one takes into account the ability of complainants to target individual cartel members as the focus of their private damages action (on the basis of the joint and several liability principle) and the fact that elements of the Directive such as disclosure will inevitably be embraced less fulsomely in some Member States than in others. However, going forward, such forum-shopping may be less focused on the availability of disclosure or limitation periods, and more on the speed, expertise and efficiency of the courts of each Member State, and their regimes on legal costs.
While it is clear that the adoption of a minimum set of rules in this area of the law must be considered to be a positive development from the viewpoint of legal certainty, and while the enhanced private enforcement climate will add weight to the deterrent effect of antitrust enforcement, it is open to question whether the Directive will make a material difference to the success and frequency of private enforcement actions in any meaningful timeframe. While the Commission has been quick to point out that it wishes to avoid the pitfalls of relying excessively on private enforcement (to the potential detriment of public enforcement), one is left with the impression that the hurdles for plaintiffs in bringing successful enforcement actions are still significant, even though the obstacles created in this field by differences in legal culture will be diminished by the Directive.
In this regard, perhaps the greatest threat to the growth of private enforcement stems from the Commission’s practice of striking settlement agreements with defendants under its so-called Article 9 procedure, and the parallel trend occurring among NCAs at Member State level. Absent definitive findings on relevant markets, dominance and a theory of harm, elements which are all usually absent in settlement agreements (the EU version of US Consent Orders), private damages claimants may continue to encounter highly significant hurdles to successful claims across the EU. The lack of binding common rules on class actions, including on the "opt-in" versus the "opt-out" model, also indicate that it is unlikely that private antitrust enforcement will gain the same momentum in the EU as in the United States. Those with aspirations to create a US-style private enforcement culture might find themselves at least a little disappointed.
What is clear though is that the Directive substantially reinforces the attractiveness of early applications under applicable leniency regimes, not only by protecting leniency statements from disclosure, but also by limiting the liability of the immunity recipient for the harm it caused. This further accentuates the liability divide between whistleblowers and other cartel members, and increases the stakes when it comes to securing a leniency marker.
 European Commission, ‘Damages actions for the breach of antitrust rules’ (2005) Staff Working Paper, at para. 6.
 Article 14, Directive of the European Parliament and of the Council 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, 24/10/2014 – http://ec.europa.eu/competition/antitrust/actionsdamages/damages_directive_final_en.pdf .
 Supra, Article 14.
 Supra, Article 14(2).
 Supra, Article 14(2).
 C-536/11 – Donau Chemie and Others, Judgment of June 6, 2013, not yet published; Case C-360/09, Pfleiderer AG v Bundeskartellamt,  ECR I-5161, where it was held that no category of documents could automatically be withheld and that, in the absence of EU law, it is for the national court to decide on the basis of national law and on a case-by-case basis whether to allow the disclosure of documents, including leniency documents. The national court should balance both the interest of protecting effective public enforcement of EU competition rules and ensuring that the right to full compensation can be exercised effectively.
 White Paper on Damages actions for breach of EC antitrust rules, COM (2008) 165, at Section 2.7, page 8.
 Directive, Article 10(4).
 Supra, Article 10(4).
 Supra, Chapter IV.
 Supra, Article 12(2).
 Supra, Article 16.
 Supra, Article 11.
 Supra, Article 11(1).
 Supra, Article 11(4).
 Supra, Article 11(5).
 Supra, Articles 18 and 19.
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