Antitrust Damages in EU Civil Actions: Will the New Directive Open the Floodgates?
On Dec. 26, 2014, the Directive 2014/104/EU 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 entered into force (Directive). The Directive’s principal purpose is to harmonize the procedures throughout the EU Member States for private plaintiffs’ bringing follow-on damages claims in antitrust actions.
Perhaps most significantly, the Directive effectively permits follow-on damages actions for antitrust claims for the first time in several EU Member States. Opening several jurisdictions to these follow-on actions has the potential of increasing the total number of follow-on damages claims for a given anti-trust case, and thus may significantly increase the financial exposure for businesses involved in anti-competitive conduct.
Although the Directive is liberal in several respects, the European Commission stated in a press release relating to the Directive that “the European approach does not conceive private damages actions as a tool for punishment and deterrence of those who breach antitrust rules.”1 Rather, the Commission explained that in its view, “Private and public enforcement are complementary tools: their combination will create a stronger enforcement of EU antitrust rules overall. This is why the Directive includes measures to optimize the interplay between these two tools and to avoid any undue interference of private damages claims with effective public enforcement.”
Nevertheless, the Directive includes a number of specific noteworthy provisions easing potential private follow-on plaintiffs’ evidentiary burden, and thus lowering the hurdles to bringing follow-on claims. First, the Directive makes a national competition authority’s decision in a particular antitrust claim binding on the national courts, allowing private individuals to rely in their follow-on actions on a decision that an antitrust violation has occurred as prima facie evidence of the violation. This evidentiary boost should make it easier for private individuals to prevail in their follow-on actions. Second, it codifies a presumption “that cartel infringements result in harm.” The presumption, unless rebutted by defendants, makes damages in cartel cases all but guaranteed. Third, the Directive works to facilitate private plaintiffs’ ability to prove their cases, subjecting a broad range of documents to disclosure, and enabling disclosure across EU Member States. The Directive is also liberal in its definition of potential plaintiffs, permitting both direct and indirect purchasers harmed by anticompetitive conduct to seek compensation in follow-on damages suits.2
Although the Directive provides additional opportunities for follow-on damages claims, and lightens potential plaintiffs’ procedural burdens, it remains to be seen whether it will actually open the floodgates for such claims, or only permit their use as an additional tool to “optimize” enforcement against antitrust violators.
1 European Commission Press Release, Antitrust: Commission proposal for Directive to facilitate damages claims by victims of antitrust violations – frequently asked questions (Apr. 17, 2014).
2 This diverges from the U.S. Sherman Act doctrine pursuant to Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), although a number of states in the UJS allow indirect customer suits.