This paper, available here, provides an overview of the binding effect of public enforcement decisions in follow-on competition law cases in Europe. It discusses the material, subjective and temporal scope of this binding effect. It also tackles other issues, such as the obligations of national courts vis-a-vis non-infringement decisions and ongoing investigations. Finally, it looks into some arguments put forward by litigants before national courts to avoid or circumvent the binding effect of public enforcement decisions.
Sections II and III explain the basis for EU and national competition infringement decisions being binding in subsequent damages claims.
It follows from Article 16(1) of Regulation /2003, which mainly codified preceding case law, that European Commission decisions identifying infringements of EU competition law which have become final (res judicata) are binding upon national courts in follow-on private enforcement actions. A national court can only escape this binding effect if it believes that the Commission’s infringement decision is invalid and the CJEU declares it to be so following a referral.
As regards the binding effect of national infringement decisions, it is important to distinguish the situation before and after the Damages Directive entered into force. Under the Damages Directive, national infringement decisions not subject to any further appeal create an irrefutable presumption of the existence of the infringement in question when a follow-on claim is brought in the courts of the country where the competition authority issued the infringement decision. Furthermore, courts must recognise an infringement decision as providing prima facie evidence of an infringement even when a competition authority of a different Member State adopted the relevant decision.
Before the entry into force of the Directive, however, there was no provision of EU law governing this issue. However, national rules concerning the burden of proof might still have to be adjusted to ensure the effectiveness of EU Law. AG Kokott argued in her Opinion in Cogeco that the exercise of the right to compensation would be made excessively difficult if no effect was granted to decisions of Member States’ competition agencies in damages claims, given the “special complexity” of many infringements of competition law and the practical challenges for claimants to prove such infringements. In her view, under the principle of effectiveness, a final infringement decision by a national competition authority must be treated at least as providing indicia of the infringement. The author endorses this. He also argues that, while there is no case law on the binding effect of national competition authorities from other Member states, this approach should apply to those decisions as well.
Sections IV to VI are concerned with the material, personal and temporal scope of this binding effect.
Granting binding effect to an infringement decision means, first and foremost, that claimants benefit from an irrefutable presumption (juris et de jure) of the existence of that infringement, as declared in the infringement decision. However, the parties will still need to establish that the infringement caused loss and to quantify that loss. Inasmuch as possible, claimants will want to rely on the binding effect of infringement decisions to establish these elements. The question of what elements of an infringement decision – in addition to a finding of infringement – are binding on national courts thus becomes very important for follow-on claims in practice. However, infringement decisions often do not even provide a clear, detailed description of what the infringement was. This problem has been exacerbated by authorities’ willingness to negotiate the content of a decision in exchange for a settlement with the undertakings under investigation, sometimes making decisions so vague as to be useless for follow-on claims for damages.
In any event, and according to Recital 31 of the Damages Directive, the scope of the binding effect of an infringement decision extends to the material, personal, temporal and territorial scope of the infringement identified in the decision.
From a material standpoint, an infringement for the purposes of a follow-on claim is the one identified in the operative part of the decision or judicial appeal, even if it may be necessary to resort to the body of the decision or other documents to properly interpret this operative part. Only the statements included in a decision which positively define the scope of the declared infringement are binding on national courts. Thus, instrumental “facts” affirmed in the decision are not, in themselves, binding, unless they are an integral and indispensable part of the declaration of infringement. On the other hand, the author seems to consider that it is open to defendants in follow-on claims to adduce evidence that a practice has pro-competitive effects susceptible to exempt the conduct from antitrust liability, so long as this is done by putting forward novel evidence and/or arguments which were not already considered in the res judicata public enforcement decision.
The author holds that the binding effect of European Commission infringement decisions is not limited as regards their subjective scope. Accordingly, the declaration of an infringement by the Commission (or confirmed by the Court) will be binding on national courts regardless of the parties to the dispute, and of whether or not they were addressees of the EU decision (erga omnes effect). The author argues that this is in line with the case law on the effect of commitment decisions on third parties. I would point out that there are contrary opinions in this regard. Further, it strikes me that, even if correct, the author’s approach risks eliding the matter of binding effect regarding the infringement with the question of should be the defendant in a damages claims. We already looked at this matter last week, so here I will limit myself to remarking that the author notes that there is no clear European guidance as regards the subjective binding effect national infringement decision – even if, following the EU Damages Directive and the ECJ’s judgment in Skanska, the trend seems indeed to be to focus on the relevant economic unit rather than on the specific legal entity to whom an infringement decision was addressed.
Sections VII and VIII consider the obligations of national courts relating to non-final infringement decisions and ongoing investigations.
A national court faced with a follow-on action to a European Commission infringement decision which is not yet final is not entirely free to decide what to do. The obligation to avoid contradiction with Commission decisions extends even to situations where the decision is not yet final, because acts of EU Institutions “are in principle presumed to be lawful until such time as they are annulled or withdrawn” and national courts cannot control the validity of those acts. In these cases, the court has only two options: (i) suspend proceedings to await the outcome of the annulment action; or (ii) suspend proceedings and refer the issue of the validity of the decision to the CJEU. Furthermore, if the Commission is investigating an infringement, national courts must “avoid giving decisions which would conflict with” the potential decision, and, for that purpose, may assess whether it is necessary to stay its proceedings.
A final section is devoted to commitment decisions.
Commitment decisions terminate antitrust investigations without concluding that the investigated party infringed competition law. At the same time, such decisions also do not certify that the investigated practice was lawful, so national courts are free to conclude that the practice in question infringed EU Law.
One would perhaps expect such decisions to have no legal effects whatsoever in private enforcement actions relating to the investigated practices. However, this is not correct. First, conduct undertaken under a commitment imposed by the European Commission cannot be found to infringe competition law by a national court under the Masterfoods case law. Further, European courts have held that both the principle of sincere cooperation laid down in Article 4(3) TEU, and the objective of applying EU competition law effectively and uniformly, require the national court to take into account the preliminary assessment carried out by the Commission in its commitment decision and regard it as an indication, if not prima facie evidence, of the anticompetitive nature of the agreement at issue. Third, commitments may entail the breach of contractual commitments. If the breached clause is valid, an undertaking subject to a commitment decision cannot invoke the obligations imposed upon it in the commitment decision to escape contractual liability. The decision may prohibit a company from adopting the behaviour it was contractually required to adopt, but it does not exempt it from compensating its counterparty for breach of contract.
The paper is mainly expositive, and it cannot be faulted in this regard – it is, in effect, fairly comprehensive. On what is a complex topic that is bound to trigger disputes in most follow-on claims in Europe (which number, as we saw a few weeks ago, has been increasing exponentially), the author covers most angles and has produced a paper that is bound to be useful to those involved in these matters.
The author also advances some rather sweeping propositions regarding how much guidance has already been provided by the courts, and how clear this guidance is. The author also usually interprets this guidance as making private enforcement easier, on the basis of the need to protect the efficiency of the right to compensation given how difficult it is to bring competition damages claims in practice. I am always sceptical when broad propositions are inferred from narrow rulings and the (rather stringent) principle of effectiveness under EU law, as is the case here. However, that does not mean the author is not right – even if it means that I think these propositions will have to be tested in court before they are accepted as good law.