1. The Commission published a proposal for a directive on rules governing actions for antitrust damages
On 11 June 2013, the European Commission published a proposal for a directive for competition law infringements (the "Directive"). The Directive intends to streamline damages actions across the Member States, given the current uncertainty and lack of uniformity, according to the European Commission. The following summarizes the main provisions in the proposed Directive.
Disclosure of evidence: The Directive proposes three categories for the treatment of evidence under a request for disclosure. First, the disclosure of evidence that will be granted absolute protection can never be ordered for an action for damages. This evidence includes the leniency corporate statements and the settlement submissions. Second, the evidence under temporary protection can only be disclosed after the competition authority has closed its proceedings. This category encompasses documents that parties and the competition authorities have prepared for the enforcement proceedings. In the third category falls all other evidence that is not in the previous two categories. The proposed Directive seeks to allow the evidence in the third category to be disclosed at any moment in time, subject to a number of restrictions that will, for example, prevent the thwarting of on-going investigations. The Directive proposes setting sanctions for parties that destroy evidence or refuse to comply with disclosure. The national courts will determine the appropriate sanctions such as the ability to draw adverse inferences.
Probative value of national decisions: The Directive will give probative value to decisions by national competition authorities or review courts in order to facilitate a subsequent action for damages. This probative value is already given to the final decisions of the Commission and the judgements of the Courts of the Union.
Limitation periods: The Directive imposes a minimum period in which an action can be brought to five years after the victim can reasonably be expected to have knowledge of the behaviour constituting the infringement, the harm and the identity of the infringer. In addition, the limitation period will be suspended for the duration of an investigation and appeal, and for one year thereafter.
Joint and several liability: The Commission intends to limit the liability for immunity applicants. The liability will be reduced to the damage caused to direct or indirect customers of the immunity applicant. However, the immunity applicant will remain a “last resort debtor” and may be held fully liable if the injured party will not be able to obtain full compensation from other infringers.
Passing-on of overcharges: If the claimant is a direct customer who has passed on charges to the indirect customers, then those charges will not be included in the calculation of actual loss under this Directive. This "passing-on defence" should be a valid defence according to the Commission, with the burden of proof placed on the defendant. However, if it is "legally impossible" for indirect customers to claim damages, passing-on is not a valid defence under this proposal. In actions of indirect customers, the burden of proof that overcharges have been passed-on is on the indirect customer. Nevertheless, the Commission proposes a presumption that overcharges have been passed on if certain conditions are met. Courts should take account of claims by other parties in the distribution chain to prevent overcompensation and may stay the proceedings to this effect.
Quantification of harm: The Directive proposes establishing a rebuttable presumption that harm was caused by the infringer’s actions. It will then be up to the defendant to prove that there was no harm caused by the infringement.
Consensual dispute resolution: The Directive proposes a suspension of limitation periods during the consensual dispute resolution negotiations and a reduction of liability for the settling infringer to the actual "share of the harm" it caused. However, this reduction of liability will become unavailable if the victim is unable to recover full damages from the other non-settling co-infringers.
The proposed Directive is a draft; it may undergo substantial changes in the legislative and adoption processes, which could take another eighteen months. Once the final text is approved, Member States will have up to two years to implement its provisions.
2. ECJ declares incompatible with EU law an Austrian provision precluding access to cartel case files without party consent
On 6 June 2013, the European Court of Justice ("ECJ") published its judgement in Donau Chemie (C-536/11). The case concerned a reference for a preliminary ruling brought before the Oberlandesgericht Wien (Higher Regional Court, Vienna), sitting as the Kartellgericht (Austrian Cartel Court ("ACC")). The question to the ECJ was whether a provision of national law that precludes the possibility of third party access to documents in the national court's cartel case file, absent the consent of the parties in that cartel case, is compatible with EU law.
The ACC had previously imposed fines on the members of a cartel on the Austrian market for the wholesale distribution of printing chemicals. An association of customers, ("VDM"), applied for access to the case file before the ACC. However, a provision of Austrian national law precluded third party access to the files of competition law proceedings absent the consent of all the parties to those proceedings. Since none of the parties except the Austrian Federal Cartel Authority ("FCA") gave consent for disclosure, the ACC had to withhold access to the file.
The ACC asked the ECJ whether the provision was compatible with EU law. The ECJ ruled that this was not the case. It referred to its previous judgements in Courage and Crehan (C-453/99), Manfredi (C-295/04), and Pfeiderer (C-360/09), where it had established that the national rules applicable to damages claims for EU law infringements should not be made practically impossible. The ECJ found that the national provisions must allow national courts to engage in a case-by-case balancing exercise of interests where a third party request for access to file is made. The Austrian provision did not allow for any balancing of interests, since access to the file could only be granted with the consent of the addressees of the decision. The ECJ noted that the public interest in an effective leniency programme should be balanced against the claimant's interest in disclosure and that this balancing act should be made for every single document of a case file. Therefore, the Austrian provision was in violation of European law.
In this case, therefore, the ECJ basically confirmed the principles it had established in Pfleiderer.
3. European Court of Justice affirms that the theory of economic entity does not imply that earlier cartel infringements by other group companies will automatically increase fines
On 13 June 2013, the European Court of Justice ("ECJ") rendered its judgement in the case Versalis SpA v. Commission (C-511/11 P) upholding the General Court's judgement in its entirety. In particular, the ECJ upheld a finding of personal responsibility of one company for actions carried out by another company when both companies are part of the same economic entity. The ECJ quoted established case law on the rebuttable presumption of decisive influence to confirm that the General Court ("GC") rightly considered all three entities to form one single undertaking for competition law purposes. In view hereof, the ECJ confirms the view of the General Court that, in light of the circumstances at hand, the principle of personal responsibility does not preclude the penalty for the infringement initially committed by one Eni subsidiary (EniChem SpA/Syndial) and subsequently continued by another Eni subsidiary (Versalis) from being imposed in its entirety on the latter.
However, the ECJ confirms that, when calculating the amount of the fine and when applying a multiplier for earlier cartel infringements, the Commission has a duty to state the reasons why it takes into account earlier cartel infringements committed by the same undertaking so as to enable the addressees to exercise their right of appeal. In the present case, the Court found that, even if previous cartel decisions referred to ‘Eni’ as involved party and/or were addressed to Versalis’ former parent ‘Enichem’, they did not enable it to understand ‘in what capacity and to what extent’ Versalis – itself not an addressee of the decisions – was involved in them.
Therefore, the ECJ confirms the GC’s ruling in as far as it lowered the fine on Versalis as there were insufficient reasons for a finding of repeat infringements.
4. European Court of Justice affirms in full the General Court's judgement in Quinn Barlo
On 30 May 2013 the European Court of Justice ("ECJ") upheld the judgement of the General Court ("GC") in the case Quinn Barlo and Others v. Commission (C-70/12 P). The ECJ affirmed the compatibility of the GC's judgement with the general principles of European Union ("EU") law, including the presumption of innocence, the protection of legitimate expectations, and equal treatment.
The Appellants had been found by the Commission to have infringed Article 101 TFEU by engaging on a series of price agreements and exchanging of commercially sensitive information for the polymethyl-methacrylate market. On appeal, the GC concluded that the infringement was of shorter duration than that found by the Commission, namely 11 months and 28 days. The GC thus reduced the fine by 10%. In addition, the original increase in the fine for cartel length was reduced from 20% to 10%. Notwithstanding that according to the 1998 Fining Guidelines, infringements of less than one year do not merit any increase in the fine, the GC stated that it sought to reflect the duration of the participation. The GC held that the Guidelines do not set out provisions as imperative rules and cannot bind the court.
Before the ECJ, the Appellants claimed that the GC did not follow the 1998 Guidelines in calculating the fine and had therefore committed an error. The ECJ, however, upheld the GC's judgement in full. The ECJ reaffirmed that the GC is entitled in its "exercise of unlimited jurisdiction" to substitute its own appraisal for the Commission's in relation to the fines. The Guidelines are self-imposed restrictions by the Commission, however, they cannot bind the Courts of the Union. The Courts may depart from these guidelines and state their reasons. In the present case, the Appellants failed to challenge the reasoning of the GC and thus their appeal in this respect failed. The ECJ reaffirmed that the courts will "consider case by case situations before them, taking into account all the matters of fact and law relating to them".
5. The General Court confirms fines for three undertakings in the aluminium fluoride cartel
On 18 June 2013, the General Court ("GC") dismissed the appeals lodged by Fluorsid, Minmet and Industries Chimiques du Fluor ("ICF") against the Commission decision of 25 June 2008. The decision imposed EUR 4.97 million fines for their participation in a horizontal price-fixing agreement from 12 July 2000 until 31 December 2000 in the aluminium fluoride sector (T-404/08 and T-406/08).
The case involves a review of a Commission decision that applies point 18 of the 2006 Guidelines on the method of setting fines, relating to worldwide cartels. According to point 18, in order to set the basic amount of the fine, the Commission may determine the share of the sales on the worldwide market of each undertaking party to the infringement and apply this share to the aggregate sales within the EEA of the undertakings concerned. The GC upheld this reading of point 18.
The Commission therefore does not need to take into account the absolute market share. This is the total value of the sales of all the undertakings active on the market (irrespective of their participation in the infringement), as it had done in two previous cases, Marine Hoses (COMP/34.406) and in Power Transformers (COMP/39.129).
6. Due to limited impact of infringement, Trade and Industry Appeal Tribunal reduces fine for providing wrong information
In its judgement of 14 May 2013, the Trade and Industry Appeal Tribunal (College van Beroep voor het bedrijfsleven, "CBb") lowered a fine imposed by the predecessor of the Authority Consumer & Markets (Autoriteit Consument & Markt, "ACM") for failure to provide accurate information for the notification of a concentration (LJN: CA3055). According to the CBb, the ACM had not sufficiently taken into account the limited impact of the infringement. The CBb lowered the initial fine from EUR 486,000 to EUR 312,000.
In its appeal before the CBb, the applicant did not dispute the violation. Instead, the appeal focused on the mitigation of the fine, in particular by questioning whether the ACM applied the proper gravity factor in light of the fact that the information was not essential for the notification, that the wrong information was provided accidentally and moreover that the wrong information was quickly corrected.
In accordance with settled case law, the CBb fully reconsidered the amount and the calculation of the fine, thereby checking whether the fine complied with the principle of proportionality as is stipulated in the General Administrative Law Act (Awb) and other principles of sound administration. The CBb first of all rejected the applicant's claim that its failure to provide accurate information had been an accident. It emphasized that the ACM could and should expect a professional party to conduct a thorough investigation after receiving an unambiguous question from the ACM. The CBb however corrected the ACM's assessment of the gravity factor. According to the CBb the ACM had not sufficiently taken into account the limited impact of the applicant's infringement. The CBb therefore held that the gravity factor should be lowered from 1.5 to 1.
This case shows that the true impact of a violation of the obligation to provide correct information may influence the gravity factor.
7. Overview competition law developments in civil proceedings 2012 (in Dutch)
This article provides an overview of competition law developments in civil proceedings in 2012. To read the article in full, please click on the title:
Kroniek civiele rechtspraak mededingingsrecht 2012
Stefan Tuinenga and Jeroen Kortmann, Markt & Mededinging, May 2013, vol. 2.