Infringement decisions by competition authorities in Europe provide irrefutable, or at least prima facie evidence of antitrust violations in follow-on cases brought before national courts. This binding effect of infringement decisions is meant to ease the burden on injured parties seeking to obtain damages. Evidentiary rules applicable to investigations thus have a bearing on the outcome of civil litigation and the scope of potential damages exposure.
The single and continuous infringement (SCI) is an example of such an evidentiary rule. This legal construct alleviates the burden on competition authorities to prove individual details of cartels whose membership and activities may have evolved over time. However, appropriate limiting principles are required to ensure that defendants are not paying for harm they have not caused or could not have prevented.
This article, available here, discusses the evidentiary value of single and continuous infringement findings in follow on damages litigation, and explores the available limiting principles. It is structured as follows:
After the introduction, a second section provides a framework for understanding the impact of public enforcement on follow on claims.
It provides an overview of the various developments that promoted private enforcement in the EU. It reviews the ECJ’s case law – including the recognition of direct effect of Arts. 101 and 102 in Brasserie de Haecht and BRT v. SABAM, and the recognition of a right to compensation in Courage and Manfredi – and the Damages Directive.
As a result of these developments, the shadow of follow-on damages hangs over every investigation, especially cartel investigations.
A third section considers the binding effect of infringement decisions.
According to Article 16 of Regulation 1/2003, national courts cannot take decisions ‘running counter’ to a Commission decision. In European Community v. Otis, the CJEU confirmed that this rule also applies when national courts are hearing cases for damages for loss. Pursuant to Article 9 of the Damages Directive, Member States have to ensure that an infringement finding in a final decision by a domestic national competition authority (NCA) or review court is irrefutably established for the purposes of an action for damages brought before national courts. In addition, a final decision rendered in another Member State may be presented before the national courts as at least prima facie evidence that a competition law infringement has occurred.
A fourth and fifth sections discuss the concept of single and continuous infringement and its implication for fine amounts.
A ‘single and continuous infringement’ (SCI) is a legal construct that encompasses the various acts that comprise an overall plan to distort competition. A competition infringement can result not only from an isolated act, but also from a series of acts or from continuous conduct. If the different actions form part of an overall plan because their ‘single objective’ distorts competition in the internal market, the Commission is entitled to impute responsibility for those actions on the basis of participation in the infringement as a whole. This allows parties who merely intended to contribute to the common objectives pursued by all the participants, and who were aware or could reasonably have foreseen the offending conduct (planned or put into effect) by the other participants in pursuit of these objectives, to be held liable for the infringement as a whole. A corollary of SCIs is that an undertaking which has directly taken part only in some forms of anticompetitive conduct, and was not aware or could not have reasonably foreseen all the other offending conduct, will only be liable for the conduct in which it participated directly, of which it was aware or that it could have reasonably foreseen.
While the SCI doctrine captures the various forms that a cartel may take, it effectively lowers the standard of proof to establish an infringement. A company can be held liable for an infringement covering products, countries and/or intermittent periods in relation to which the infringement did not restrict the company’s normal commercial behaviour. The doctrine also leaves a lot of room for interpretation by authorities and courts.
On the other hand, the fact that an undertaking has not taken part in all aspects of a single and continuous infringement, or that it played only a minor role in the aspects in which it did participate, will normally be taken into account when the amount of the fine is set.
Sections six to eight deal with the implications of the single and continuous infringement in private litigation.
Given the binding effect of infringement decisions, the role of courts in follow-on damages is limited. This role can be further constrained depending on the extent to which courts find an infringement decision binding – in particular, whether the court is bound not only by a finding of infringement but also by the grounds of a decision. Furthermore, since defendants are in principle jointly and severally liable for the harm caused by the infringement as a whole, even parties who did not actively participate in some aspects of the cartel, e.g. because they were not even active on that market, will face difficulties countering claims based on sales by other participants.
Without appropriate limiting principles, liability for the entirety of the infringement could have unequitable consequences and give rise to perverse incentives for companies who find themselves at the fringes of a cartel. Given the risks for defendants – and potential adverse effects on public enforcement – of this, the author advances three limiting principles for the use of the single and continuous infringement doctrine in private litigation.
These limiting principles are: (i) companies should only be liable for those elements of the SCI of which they are aware, in line with recent decisional practice; (ii) the binding effect of an infringement decision should be limited to those elements of the decision which can be subject to judicial appeal, i.e. the operative part; (iii) national laws should allow a company with a limited role in an infringement which becomes the target of damages claims to be able to recover disproportionate damages pay-outs from the other cartel participants.
This is a solid, mainly descriptive piece on the implications of the single continuous infringement doctrine for follow on damages claims. It provides a good description both of this doctrine and of how it can influence private litigation, and I enjoyed it.
The discussion focuses mainly on two related areas of tension: the different extent of liability that may flow from different types of participation in a single continuous infringement, and the implications this may have for joint and several liability and concomitant contribution claims in follow on claims. I would have enjoyed a more intense focus on, and a more comprehensive discussion of each of these topics, but the argument is quite clear as it is.