New national act on antitrust damages – what to expect?
What is it all about?
The EU Directive on Antitrust Damages Actions (2014/104/EU) entered into force nearly one and a half years ago, and the Member States of the EU are obliged to implement it into their legal systems by 27 December 2016 at the latest. The main purpose of the Directive is to ensure effective private enforcement of competition rules, enabling victims of competition law infringements to receive full compensation for their losses.
Currently the national rules governing antitrust damages are rather fragmentary and can be found, for example, in the Competition Act, the Tort Liability Act, the Code of Judicial Procedure, and the Interest Act. However, on 19 May 2016, the Finnish government submitted a proposal for a new Act on Antitrust Damages, intended to take effect on 26 December 2016. The new Act shall apply to all damages actions concerning infringements of competition rules.
What will change?
Procedural rules. The new Act is expected to bring long-awaited clarification to the procedural rules in damages actions. Antitrust damages cases are handled in general courts under standard national procedural rules, while antitrust cases in general are handled by the Market Court. Arbitration is also a possibility.
Cartels are presumed harmful. Following the new Act, cartels will be presumed to cause harm and the infringers will have the burden of proof to rebut such presumption. However, victims of the infringement still have to show the amount of their losses, i.e. the percentage of the price increase that has been caused by the infringement. If the exact amount of the damage cannot be proved, the court may estimate the amount of the damage.
Consequences of passing-on overcharges. Currently, there are no rules in the Competition Act on passing-on overcharges (i.e. the difference between the price actually paid and the price that would have prevailed in the absence of an infringement of competition law) to other parties in the supply chain. According to the proposed Act, the defendant, i.e. the infringer, can – as a defence against a claim for damages – refer to the fact that the claimant has passed-on the whole or part of the overcharge resulting from the infringement of competition law to another party. The burden of proof of such passing-on is on the infringer.
Respectively, if an indirect purchaser (i.e. a downstream purchaser who did not buy services/goods directly from the infringer) claims for damages (note: compensation of harm can be claimed by anyone who suffered it, irrespective of whether they are direct or indirect purchasers), it has to prove that an overcharge has been transferred to it. In the last resort, it is up to the court to estimate to what extent the overcharge has been passed-on in the supply chain.
Joint liability and immunity. When several undertakings infringe competition rules together, as in the case of a cartel, they are held jointly and severally liable for the entire harm caused by the infringement. This principle is already applied in Finland, but now it is also expressly mentioned in the new Act. However, pursuant to the upcoming Act, an undertaking which has received immunity from fines under a leniency regime (i.e. if the undertaking has, for example, provided information about the infringement in which they participated) is in principal jointly liable only towards its own direct and indirect purchasers or providers. The new Act also provides for a special shield from joint liability for small and medium-sized enterprises.
Following the new Act, the leniency regime will be supported by the prohibition to disclose leniency statements as evidence in a court process, unless the recipient of immunity itself has brought them before court.
Limitation periods. According to the new Act, the general limitation period will be five years from the date on which the victim became or should have become aware of the infringement, or 10 years from the time the infringement ceased. If the Finnish Competition and Consumer Authority (“FCCA”) starts infringement proceedings, the limitation period will be suspended or interrupted, which enables the victim the to wait until the proceedings are finished before starting its own actions. If the remaining part of the limitation period is less than one year when the FCCA’s decision becomes final, the victim still has one year to bring damages actions before court.
A consensual dispute resolution procedure between the infringer and the victim will also suspend the limitation period. The parties are thus encouraged to resolve the dispute outside of court. The suspension applies to the parties that are represented in the settlement procedure. Court proceedings may also be suspended while the settlement is pending, but not for more than two years.
Final infringement decision basis for damages action. It is clearly stated in the proposed Act that when a damages action is handled in a civil court or arbitration, the verdict shall be based on the final infringement decision of the FCCA, the Market Court or the Supreme Administrative Court, in case such decision exists. The court/arbitrator shall therefore not re-examine the existence of the infringement itself. Court cases will thus most probably concentrate on the amount and calculation of the damages – on which the new Act remains silent.
It should be noted, however, that anyone who has suffered harm due to the infringement may bring independent damages actions directly to a civil process as well (for example, when the FCCA has chosen not to examine the case). In other words, a decision regarding the infringement itself is not a mandatory prerequisite for a civil process.
In addition to the matters listed above, the proposed Act also contains provisions on interest, access to evidence and the right of recourse.
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