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Document 52013SC0204
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Damages actions for breach of the EU antitrust rules Accompanying the proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 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
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Damages actions for breach of the EU antitrust rules Accompanying the proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 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
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Damages actions for breach of the EU antitrust rules Accompanying the proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 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
/* SWD/2013/0204 final */
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Damages actions for breach of the EU antitrust rules Accompanying the proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 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 /* SWD/2013/0204 final */
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
Damages actions for breach of the EU antitrust rules Accompanying the proposal for a DIRECTIVE OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL
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
1. Introduction 1. The EU right to
antitrust damages. Articles 101 and 102 of the Treaty on the
Functioning of the European Union (TFEU) prohibit anticompetitive agreements
and abuses of a dominant position. The European Commission, together with
National Competition Authorities (‘NCAs’), is responsible for enforcing those
prohibitions (public enforcement). At the same time, the Treaty
provisions create rights and obligations upon individuals, which must be
enforced by national courts (private enforcement). Among these is the
right to claim compensation for any harm suffered as a result of an
infringement of the EU competition rules. The Court of Justice has, since
2001, repeatedly stated that, as a matter of EU law, any individual must be
able to claim compensation for such harm (Courage, C-453/99 and Manfredi,
C-295 – 298/04). More than ten years later, most victims of a competition
law infringement are still not able, whether individually or collectively, to
effectively exercise that EU right to compensation. This is largely due to
a lack of appropriate national rules governing actions for damages. Moreover,
where those rules exist, they are so different among Member States that they
result in an uneven playing field for both infringers and victims of the
illegal conduct. 2. Public vs private
enforcement. Recent case law at national and at EU level has also
highlighted that the EU right to compensation can sometimes be at odds with the
effectiveness of public enforcement of EU competition rules by the Commission
and NCAs. This is the case when the victim of a competition law infringement is
seeking access to information that a competition authority obtained under a ‘leniency
programme’ (see below at paragraph 11). Following a judgment of the Court of
Justice in June 2011 (Pfleiderer, C-360/09), in the absence of EU rules
on this matter, potential leniency applicants do not know whether the
information they give to a competition authority will eventually be divulged to
a victim of the competition law infringement. This may put them in a weaker position
in terms of potential damages claims compared to other undertakings that did
not cooperate with the authority. Legal uncertainty may thus be detrimental for
the effectiveness of leniency programmes at EU or national level and hence for
the effectiveness of public enforcement measures to tackle secret cartels. 3. Objectives
of the initiative. The current Antitrust Damages Initiative has two
primary objectives: (i) to ensure the effective exercise
of the EU right to compensation; and (ii) to regulate some key aspects of the
interaction between public and private enforcement of EU competition law, with
a view to striking a balance between enforcement by the Commission and NCAs and
damages actions before national courts and thus achieving effective overall
enforcement of the EU competition rules. 2. Problems to be addressed 2.1. Ensuring the effective
exercise of the EU right to compensation 4. Removing
obstacles to effective compensation. Most victims of infringements
of EU competition law still remain uncompensated. Apart from a perceived lack
of awareness, even those victims who want to obtain redress face a very
unfavourable risk/reward balance, due to procedural obstacles and the costs
of bringing an action. This weakens the functioning of the EU competition rules
and is difficult to reconcile with the fundamental right to effective judicial
protection pursuant to the EU Charter of Fundamental Rights. In its 2005 Green
Paper on damages actions for breach of the EC antitrust rules, the
Commission identified the main obstacles to effective compensation. In
2008, it adopted a White Paper on antitrust damages actions, setting out a
number of suggestions as to how to remove these obstacles and ensure effective
private enforcement in the Member States. 5. Public
consultations. In the public consultation on the White
Paper, and in two subsequent public consultations, civil society and
institutional stakeholders such as the European Parliament and the European
Economic and Social Committee welcomed the proposed measures. Moreover, the
European Parliament has explicitly called for EU legislation on antitrust
damages actions. 6. Stakeholders’
submissions. In the above public consultations, stakeholders
concurred with the Commission’s analysis of a number of main obstacles which
stand in the way of more effective compensation: ·
Potential claimants pointed at the difficulties they face in obtaining access to the
evidence they need to prove a case. By nature, antitrust damages actions
often require an unusually high level of costly factual and economic analysis.
They present difficulties for claimants in terms of access to crucial pieces of
evidence that are often kept secret in the hands of defendants. Stakeholders
also pointed to the lack of clear rules on the passing-on defence, i.e.
whether a defendant should be allowed to demonstrate that a direct purchaser
passed on the higher price resulting from a cartel to its own customers further
down the distribution chain. Among other issues that may have a negative effect
on the chances of success of an action, limitation periods are also
significant, e.g. when there is insufficient time to bring an action after an
infringement has been found. The costs of an action can significantly increase
when the parties have to prove the infringement even if it has already been
found by an NCA, in the absence of uniform rules on the probative value of
such infringement decisions. Moreover, the quantification of the harm
suffered is often a complex and costly exercise that may affect the
likelihood of a case being pursued. ·
Consumers and SMEs are negatively affected by a lack of effective collective
redress mechanisms, which would allow many consumers or businesses to bring
their claims jointly and to share the costs and burdens of legal action. ·
Business associations, while welcoming the objectives pursued by the Commission, generally
warned against the risks of litigation excesses as experienced in other
jurisdictions, and stressed the need to provide safeguards against abusive
unmeritorious litigation, in particular if claims are pursued collectively. 7. An uneven playing
field in the internal market. Besides the specific obstacles which
hamper the effective exercise of the EU right to compensation, there are still highly
diverse national rules governing antitrust damages actions. This diversity has
increased over recent years: it causes legal uncertainty for all parties
involved and may hamper effective private enforcement of competition rules,
especially in cross-border cases. This also results in appreciable
distortions of competition in the internal market, as the opportunity for
victims to obtain redress and the chances for infringers to face liability
differ depending on where they are established and where they can bring their
claims. This is illustrated by the current concentration of antitrust
damages actions in three EU jurisdictions: the UK, Germany and the Netherlands. This indicates that claimants consider the rules applicable in those
countries to be more suited to their purposes than in others. Conversely, it
appears more difficult for victims of competition law infringements in the other
Member States to effectively exercise their EU right to compensation. This
uneven enforcement may even result in a competitive advantage for some
undertakings that have breached Articles 101 or 102 TFEU, and serve as a
disincentive to exercise the right of establishment and the freedom to provide
goods or services in Member States where the right to compensation is more
effectively enforced. 8. Likely costs of the
current situation. The cost of ineffective private enforcement of competition
law is estimated at up to € 23 billion or 0.18 % of the EU’s 2012 GDP
— in terms of compensation that is foregone by victims each year across the EU.
Remedying this problem would shift the cost of antitrust infringements from the
victims to the infringers, and make it easier to detect distortions of
competition. In terms of overall enforcement of Articles 101 and 102 TFEU, the
increased likelihood of being held liable for illegal conduct would discourage
anti-competitive behaviour (increased deterrence), with subsequent benefits for
consumer welfare. 2.2. The interaction between
public and private enforcement of EU competition law 9. Definitions.
Public enforcement of EU competition law is a matter for the Commission
and NCAs, which are empowered to find, sanction and prevent infringements of EU
competition rules. Public enforcement is also a matter for the courts reviewing
decisions taken by competition authorities. Private enforcement concerns
enforcement of the same rules by way of actions brought before national courts.
In the absence of EU law on the matter, private enforcement is almost
exclusively governed by national civil law. Private enforcement can broadly
be subdivided into three types of cases: (i) compensation of harm suffered as a
result of an infringement of EU competition law (actions for damages), (ii) requests to cease behaviour
infringing EU competition law (injunctive relief); and (iii) declaration of nullity of
contractual provisions in breach of the EU competition rules. 10. Complementarity
and interaction of public and private enforcement. Public
and private enforcement are complementary tools for the effective application
of Articles 101 and 102 TFEU. A private action can be brought before a court
without a prior decision by a competition authority (‘stand-alone actions’).
However, antitrust damages actions are most often brought once a competition
authority has found an infringement of EU competition rules (follow-on
actions). The resulting interaction between public and private enforcement concerns
the following key aspects: (i) access to information held by the
competition authorities, (ii) the binding effect of infringement
decisions, and (iii) limitation periods on bringing a
damages action. 11. A
key issue: disclosure of leniency documents. To detect and punish
secret cartels, competition authorities offer infringers immunity from or a
reduced fine in exchange for their cooperation. These ‘leniency programmes’ are
a very effective tool in the hands of public enforcers. Victims of the same
infringement may need the information that has been voluntarily provided by
infringers to use it as evidence and obtain compensation. In the recent Pfleiderer
case, parties who wanted to bring an action for damages against the cartel had
requested access to the leniency file of the German Competition Authority. The
German national court asked the Court of Justice whether disclosure of leniency-related
information was contrary to EU law. In its 2011 judgment, the Court of Justice
ruled that in the absence of EU law on the matter, it is for the national court
to determine on a case-by-case basis and according to national law the
conditions under which disclosure of leniency-related information to victims of
a competition law infringement must be permitted or refused. This judgment was
followed by considerable uncertainty as to which categories of documents would
be disclosable. Such uncertainty is not only detrimental to the parties
involved in damages actions, but might more specifically deter cartel
participants from cooperating with the Commission and NCAs under their leniency
programmes and adversely affect the fight against cartels, which largely relies
on leniency applications. Reduced cartel enforcement would detract from the
deterrence of public enforcement of competition law. 12. Similar problems exist in
relation to settlement cases, where the parties acknowledge their
participation in a cartel in exchange for a simplified procedure and a reduced
fine. The uncertainty regarding disclosure of documents from the file of a
competition authority relating to such proceedings might deter companies from
cooperating with the competition authorities under the settlements procedure.
Finally, disclosure of documents from the file of a competition authority during
an ongoing investigation might jeopardise such investigations and thus the
capacity of the competition authorities to sanction infringements of EU
competition law. 3. The available options 13. Identifying the
options. To remedy the problems described above, to foster an
effective right of compensation for victims of breaches of Articles 101 and 102
TFEU and to achieve an optimal balance between public and private enforcement, four
policy options were considered. They were chosen on the basis of the
assessment carried out for the White Paper, which is summarised in an Annex to
the Impact Assessment Report. The measures that were already ruled out in
the White Paper due to a disproportionate cost/benefit ratio have not been
reconsidered. Two examples of such excluded options are multiple (punitive)
damages and a wide-ranging system for pre-trial discovery of evidence.
Moreover, all options for EU action (Options 2, 3 and 4) include a
non-binding legal framework for quantifying antitrust damages. This
non-binding guidance on one of the most complex and costly issues for all
parties to antitrust damages litigation was supported almost unanimously by
stakeholders, both in the public consultation on the White Paper, and in a consultation
following the publication of a draft Guidance paper in 2011. 14. Option 1 — Zero EU
action (base-line). The first option in the report is the
baseline scenario, entailing no action at all at EU level. This involved
examining the status quo and likely developments in the absence of EU
action (prospective analysis). 15. Option 2 — Binding
act based on the White Paper (including specific collective redress system).
The second policy option envisages a legally binding instrument
incorporating the measures that the Commission put forward in its White Paper,
including a competition-specific system of collective redress that would
allow consumers and SMEs to bring their actions jointly. Such an instrument
would include: rules on the proportionate disclosure of specified
categories of evidence; limited liability for successful immunity
applicants; the binding effect of the final infringement decisions of
NCAs; a passing-on defence for the infringer to show that the damages
claimant has passed on the illegal overcharge to its own customers;
facilitation of proof for an indirect purchaser as to the scope of the
passing-on; and a specific limitation period for antitrust damages
actions. 16. Option
3 — Regulating the interplay between public and private enforcement.
The third option consists of a binding instrument that partly revises the
options put forward in the White Paper to reflect recent developments at
national and EU levels in two ways: by referring to a separate horizontal EU
approach to collective redress instead of regulating a sector-specific
mechanism; and by introducing limitations to access to evidence aimed at
preserving the effectiveness of public enforcement tools. The common ground
between these two broad changes is that both reduce to some extent the benefits
in terms of effective compensation fostered by Option 2 in order to pursue
additional policy objectives, i.e. a horizontal approach to collective redress,
as suggested by some stakeholders and by the European Parliament, and in
particular better protection for public enforcement following the judgment of
the Court of Justice. The option has thus specifically been designed to
assess whether the loss in benefits as regards effective compensation are
counterbalanced by reduced costs of litigation and/or by an optimised balance
between public and private enforcement. More specifically, Option 3 differs
from Option 2 on the following points: ·
As regards the protection of public
enforcement tools, Option 2 only protects leniency corporate statements
from disclosure in actions for damages. Option 3 adds protection from
disclosure of settlement submissions, and limits disclosure during
investigations by competition authorities. The envisaged protection of public
enforcement tools would not make it excessively difficult for victims of a
competition law infringement to obtain compensation for the harm they suffered,
because of the limited scope of such protection. The protection is thus
compatible with the right to effective judicial protection, as laid down in the
EU Charter of Fundamental Rights. ·
As regards quantifying antitrust harm, Option
3 — contrary to Option 2 — provides for a rebuttable presumption relating to
overcharge harm in cartel cases. This presumption is based on the findings of
an external study, which concluded that 93 % of examined cartels cause
harm. This measure has been introduced to mitigate the impact of claimants having
more limited access to some types of evidence that may nonetheless have been
useful for proving the harm caused by a cartel. For the same reason, Option 3
contains a rule that the exercise of the claimant’s right to damages cannot be
rendered practically impossible or excessively difficult by the required level
of proof. This option suggests that Member States should allow the judge to estimate
the amount of the harm. ·
As regards collective redress, Option 3
contains no competition-specific measures. While acknowledging the
specificities of EU competition law enforcement and the possibility of specific
rules, this option relies on a separate, but horizontal, approach to
collective redress, through initiatives characterised by a broader scope. ·
Finally, Option 3 contains measures on consensual
dispute resolution, which are meant to counterbalance the absence of
specific collective redress mechanisms by facilitating other cost-effective
procedural means for the parties. These measures would remove existing
disincentives to engage in out-of-court settlements to compensate for harm
caused by an EU competition law infringement. 17. Option 4 — Non-binding
EU initiative. The fourth policy option (Option 4) consists of a
non-binding instrument recommending Member States to implement the measures
suggested by policy option 3. 4. The preferred policy
option 18. The impact of the four
policy options has been assessed in relation to the following benefits and
costs: –
Policy options score better in so far as they (1)
ensure full compensation for the entire harm
suffered; (2)
effectively protect public enforcement and
achieve a balance with damages actions in the overall effective enforcement of
Articles 101 and 102 TFEU; (3)
increase awareness, enforcement, deterrence and
legal certainty; (4)
allow for better access to justice; (5)
lead to a more efficient use of the judicial
system, e.g. by avoiding abuse of litigation and unmeritorious claims; (6)
contribute to a more level playing field in Europe for consumers and businesses alike; (7)
have a positive impact on consumer welfare and
on SMEs; and (8)
stimulate economic growth and innovation. –
On the cost side, the report looks into the impact
on (1)
litigation costs; (2)
administrative burden; (3)
error costs (i.e. the possibility of national
courts issuing a mistaken decision); and (4)
the costs of incorporating the suggested measures
into the national legal system. 19. After having assessed the
costs and benefits of the four policy options, the report finds that policy
option 3 is best at meeting the set objectives at the lowest possible costs. A
streamlined overview of the assessment is set out below, together with the main
findings explained in the report. Table (IA
Report): Summary of impacts of Policy Options
1-4 Benefits achieved/problem addressed || Impact compared to base-line (0 to +++) Option 1 || Option 2 || Option 3 || Option 4 1. Full compensation || 0 || + + + || + + || 0 / + 2. Protection of effective public enforcement || 0 || + + || + + + || 0 / + 3. Increased awareness, deterrence, enforcement and legal certainty || 0 || + + + || + + + || 0 / + 4. Access to justice || 0 || + + + || + + + || 0 / + 5. Efficient use of judicial system || 0 || + + + || + + || 0 / + 6. A more level playing field || 0 || + + + || + + + || 0 / + 7. Positive impact on SMEs and consumers || 0 || + + + || + + || 0 / + 8. Stimulating economic growth and innovation || 0 || + + || + + || 0 Costs || Impact compared to base-line (0 to — — -) Option 1 || Option 2 || Option 3 || Option 4 1. Litigation costs || 0 || - - || - || 0 / — - 2. Administrative burden || 0 || - - || - || 0 / - 3. Error costs || 0 || - || 0 / - || 0 / - 4. Implementation costs || 0 || - - || - || 0 / - 20. A preference for
binding EU action. There was a preference for options envisaging EU
action. This is because –
as regards optimising the interaction between
public and private enforcement of EU competition rules, there is a growing
consensus that this is better dealt with at EU level, in particular because of
the close connections between the Commission and the national competition authorities; –
as regards improving the procedural conditions for
victims of an EU competition law infringement to obtain compensation,
experience over recent years has shown that in the absence of EU law, only very
few Member States are taking any legislative initiative in this respect. Where
something is being done, it covers only some of the obstacles identified by the
Commission in its Green and White Papers, and these initiatives have made the legal
landscape even more diverse. 21. Without EU action, the
current divergence between national legislation on actions for antitrust
damages would persist. That would be problematic in terms of the effectiveness
of damages actions. It would also mean that the internal market would remain
fragmented in terms of the level of judicial protection, and might encourage
forum-shopping (which is usually to the detriment of SMEs and consumers, who are
less mobile). This may also result in more complex and thus costly procedures,
particularly in cross-border cases. The base-line Option 1 (no EU action) has
thus been ruled out. The preference for binding EU action, rather than soft
law, analogously led to the exclusion of Option 4. 22. A preference for a
separate, but horizontal, approach to collective redress. In the
light of the public consultation and in particular the European Parliament's
Resolution of 2 February 2012, a horizontal approach currently appears more
appropriate than a competition-specific solution. This is mainly because
competition law is not the only field of EU law in which scattered harm
frequently occurs and in which it is difficult for consumers and SMEs to obtain
damages for the harm they suffered. Similar problems (high litigation costs compared
to the individual damage) exist in other fields of law, such as consumer law or
environmental law. The basic principles applying to collective redress can, to
a large extent, be common to all these fields of law. A horizontal initiative
may also foster consistency among the fields where collective redress is
considered necessary. However, in so far as specific provisions are considered
necessary in relation to competition law, these could be laid down in a
separate chapter of the horizontal instrument or in subsequent separate legal
instruments. 23. A preference for a
more balanced system of public and private enforcement. Both Options
2 and 3 fulfil to a large extent the policy objectives of the Antitrust Damages
Initiative, since both address the main obstacles that currently hinder
effective redress for victims of antitrust infringements, building on European
legal traditions. Both options also provide safeguards for avoiding abuse of
litigation and unmeritorious claims. As such, they have a positive impact on
the fundamental right to effective judicial protection laid down in the EU
Charter on Fundamental Rights. 24. Option 2 is somewhat stronger
as regards ensuring full compensation for the entire harm suffered. However, Option
3 generally provides for a more balanced system. It offers an overall
improvement to the possibility of obtaining access to evidence, while offering
stronger protection for effective public enforcement, by protecting more
documents from competition authorities’ files. While satisfying this objective by
introducing safeguards, the option still constitutes an improvement in terms of
tackling information asymmetry in the sense highlighted by stakeholders in the
public consultations. The introduction of a rebuttable presumption in relation
to the existence of overcharge harm in cartel cases, and of the possibility to
estimate the amount of harm, make it more likely that compensation for damages
will be obtained. 25. As regards other measures,
such as the passing-on defence, limitation periods and the binding effect of
decisions adopted by NCAs, Options 3 and 2 do not differ. In countries where
similar provisions are in force, they constitute a significant incentive for
claimants. If applied EU-wide, they would improve the chances of effective
redress for victims of competition law infringements, and would help attain the
objectives of the current initiative (compensation, access to justice, and
ensuring a more level playing field). The binding effect of NCA decisions, in
particular, ensures more efficient use of the judicial system. 26. Costs.
In terms of costs, Option 3 scores better than Option 2. Litigation costs are
reduced by introducing the rebuttable presumption in relation to quantification
of harm and by facilitating consensual dispute resolution. Also, error costs
and implementation costs are lower under Option 3, mainly because there is no
provision for introducing a sector-specific framework for collective redress.
Finally, enhanced protection of public enforcement under Option 3 would reduce
the administrative burden. 5. Conclusion 27. Option 3 was chosen as the preferred
policy option to achieve the objectives of the Antitrust Damages Initiative. Summary of the contents of the preferred
policy option Full compensation || Any injured party (both direct and indirect purchasers) can claim full compensation for the damage suffered as a result of an infringement of Articles 101 or 102 TFEU. Full compensation includes compensation for the actual loss and the loss of profit, plus interest. Disclosure of evidence || The preferred policy option provides for a regime of disclosure of specified categories of evidence between the parties to an antitrust damages action. In addition, it provides for safeguards concerning the disclosure of documents from the file of a competition authority. Limited liability of the immunity recipient || To maintain the attractiveness of the Commission’s and the NCAs’ leniency programmes, the immunity recipient’s liability is limited to its share of the harm caused. The immunity recipient should remain fully liable when injured parties cannot obtain compensation from co-infringers. Binding effect of NCAs’ decisions || National courts dealing with actions for damages are bound by NCA decisions establishing an infringement of the EU competition rules. Limitation periods || Limitation periods should not impair the right to full compensation. Moreover, victims should effectively be able to bring a damages action after a final decision of a competition authority. Passing-on of overcharges || The defendant can invoke a passing-on defence against a claim brought by the direct purchaser. Conversely, in order to facilitate claims brought by indirect purchasers, proving pass-on of the overcharge to their level is made easier. Presumption of harm || Victims of cartels will be able to rely on a rebuttable presumption that a cartel leads to overcharge harm. Furthermore, requirements under national law to quantify the harm suffered must not make it practically impossible or excessively difficult for a claimant to obtain compensation. Consensual dispute resolution || Consensual dispute resolution is facilitated, as it may constitute a quicker and less costly alternative to court litigation.