This short note, available here, looks at the main developments in the two years since the European Damages Directive came into force.
A first set of developments relates to the increasing case law of the European courts on private enforcement.A noticeable trend is a significant increase in the number of preliminary references to the European courts. One consequence of these appeals thus far is to lay bare how great the impact of EU law is on substantive and procedural national rules relating to competition damages actions. These preliminary references also showed the Court to be a friend to private enforcement and a defender of the effectiveness of EU law.
This is most apparent in the recent Skanska decision. Strictly speaking, Skanska was a case concerning solely the liability of economic successors and parent undertakings for damages arising from a competition infringement by a different legal entity. The underlying question was whether the concept of undertaking that applies in public competition enforcement also applies to private enforcement – i.e. whether economic successors and parent companies can be liable for private damages in the way they already are liable for fines. The court answered this question affirmatively, at least as regards economic successors.
However, the most important holding in this case is likely to be that all substantive rules relating to the determination of the existence of a right to compensation / duty to pay compensation for an infringement of EU competition law are a matter for EU, not national, law. This builds on the ECJ’s earlier decision in Cogeco, where the Court clarified that although limitation periods are governed by national law, they must comply with the principle of effectiveness. This principle requires, inter alia, that the statute of limitations be suspended while an investigation is pending before a competition authority.
A last case reviewed was Tibor-Trans, where the CJEU confirmed that EU private international law rules allow damages claims by indirect customers to be brought before the courts of the Member State where those indirect customers bought the cartelised goods.
A second development concerns the continuous lack of aggregation of closely related damages claims.
Over the years, large pan-EU cases ended up being litigated in literally thousands of separate cases before hundreds of judges in many different Member States. In addition to procedural complexity, this inevitably leads to many contradictory decisions being adopted.
Recently, some Member States revised their laws to allow for opt-out actions, including for antitrust (e.g., UK, Belgium), while others reinforced existing opt-out mechanisms (Portugal and Netherlands). However, the Commission’s 2018 proposal for a consumer collective redress Directive does not cover competition cases, which means that there is still no viable and effective mechanism for European collective redress. There has never been a single case in the history of EU competition law where a significant number of consumers were compensated for an antitrust infringement. It is hard to understand how the Member States and the EU, which pride themselves on the rule of law and effective judicial remedies, can live comfortably with such a state of affairs.
The author sketches a number of potential alternatives to ensure effective consumer redress for anticompetitive harm. The EU could: (1) leave things as they are and trust (despite evidence to the contrary) that referrals to the ECJ will be enough to ensure effectiveness and uniform interpretation of EU Law. (2) adopt an EU version of the American federal multidistrict litigation procedure. However, the absence of federal courts, language barriers and heterogeneous legal systems make this path less viable. (3) award exclusive or optional jurisdiction for competition damages actions to an existing supranational court (e.g. the GCEU or the CJEU) or to a new permanent or ad hoc court. (4) entrust national administrative bodies and/or a public supranational entity with the protection of EU consumers injured by antitrust practices. and/or (5) extend the scope of the proposed Directive on consumer redress to antitrust, and clarifying the circumstances in which opt-out should be available.
One can only agree with the author that the impact of EU law on national rules has been somewhat greater than anticipated. For example, I am aware that a very recent decision in the Netherlands just expanded the concept of undertaking – i.e. the company liable for competition damages – to all legal entities within a single economic entity. This significantly departs from the typical rules governing tortious liability, and if adopted would change tort law in a number of other member states (e.g. Germany).
At the same time, one can come away from the article with the impression that this is the natural consequence of the implementation of the Damages Directive. I do not think that would be correct, and I know that is not what the author – who argued the Cogeco case before the European courts – can have meant. Instead, the legal trends the author identifies resulted from of the application of high-level principles of EU law, and particularly the principle of effectiveness of the right to compensation under EU law, to cases that preceded the entry into force of the Directive.
This is also apparent in a recent case not covered in this note. In Case C-435/18 Otis v Land ECLI:EU:C:2019:1069, AG Kokott made it clear (and the court seemed to accept) that the test of causation to determine whether someone had standing to sue for damages was subject to EU law, even if the rules of causation then used to determine whether the infringement causes loss are governed by national law. The result of that particular judgments was that a public body that had funded real-estate projects, which costs had been inflated by an elevator cartel, had standing to claim damages suffered for its inability to provide additional loans in the amounts of the price increase caused by the cartel. Evidently, such a loss is far removed from a competition infringement. The Otis judgment clearly overrules national tort rules that did not allow causation to be established in such circumstances (since the harm did not have a sufficient connection with the objective of protection pursued by the EU cartel prohibition), let alone granted such entities standing. Given this, and the extent to which these developments can challenge established principles of national tort law, I would not be surprised to see national courts react conservatively to the guidance emanating from Luxembourg – in effect, I believe this can go some way to explain what happened in Portugal when the Cogeco case came back to be decided by the national court.