1 The EU Damages Directive and Access to Evidence for Antitrust Damages Actions - The Strategic View - Competition Litigation 2016

The Strategic View - Competition Litigation 2016

1 The EU Damages Directive and Access to Evidence for Antitrust Damages Actions

        

Geert Goeteyn and Collette Rawnsley consider how the EU Damages Directive seeks to provide victims of competition law infringements with easier access to evidence, whilst preserving the effectiveness of public enforcement tools

Contributing firm

Introduction

The right for those affected by infringements of the EU competition rules to be compensated is well established and was acknowledged by the Court of Justice in Courage v Crehan[i] in 2001.  Noting the absence of any EU rule in this area of law, the Court of Justice called upon the Member States to designate courts having jurisdiction to hear such cases and to lay down rules to ensure effective procedures for bringing antitrust damages actions.

Several years later, the Commission had to admit that national rules on antitrust damages actions presented a picture of “total underdevelopment”.[ii]  Having identified the existence of “significant obstacles” to the effective operation of antitrust damages actions in various Member States, the Commission issued a Green Paper in 2005 and then a White Paper in 2008[iii], setting out policy proposals and specific measures to ensure access to effective redress mechanisms.

It was not until June 2013, however, that the Commission put forward a proposal for a Directive to boost antitrust damages actions.[iv]  The Damages Directive[v] was finally adopted by the EU institutions on 26 November 2014, and entered into force on 26 December 2014.  Member States have until 27 December 2016 to implement the Directive into their legal systems.

The Damages Directive has two main objectives: first, optimising the interaction between the public and private enforcement of competition law; and second, ensuring the effective exercise of victims’ right to full compensation.  Access to, and disclosure of, evidence (including information and documents held by competition authorities) plays an essential role in both.

1.     Issues Concerning Access to Evidence and the Interplay between Public & Private Enforcement

The Commission’s process leading to the adaptation of the Damages Directive identified difficulties in accessing the evidence necessary for proving a claim as one of the main obstacles to a more effective system of antitrust damages actions.  The Commission’s 2013 proposal observed that: “[…] the lack of adequate rules on the disclosure of documents in proceedings before a national court means that victims of a competition law infringement, who are seeking compensation for the harm suffered, have no effective access to evidence”.  The proposal noted that a divergence in the national rules, including those applying to access to evidence, had led to a “markedly uneven playing field”.

In addition, the Commission process highlighted the need to ensure the maximum effectiveness of, and a smooth interplay between, both public and private enforcement tools.  In this context, the Commission considered that access to information held by competition authorities should be regulated, as the disclosure of certain documents from the competition authorities’ files could negatively affect the effectiveness of public enforcement.[vi]

2.     The Position Before the Damages Directive

A.   Regulation 1049/2001

Historically, claimants sought access to evidence from defendants before national courts and/or from the Commission on the basis of Regulation 1049/2001.  Pursuant to Regulation 1049/2001,[vii] any legal or natural person residing in a Member State has a right of access to documents from the EU institutions, subject to certain exceptions provided for in Article 4.[viii]  These exceptions are based on the need to balance opposing interests in any given situation, i.e. the interests which would be favoured by the disclosure of the documents at issue and those which would be jeopardised by such disclosure.[ix]  To justify refusal of access to a requested document, the Commission (or other institutions) must provide explanations as to “how access to that document could specifically and actually undermine the interest” at issue.[x]

B.   Case-law and decisional practice concerning categories of documents

In order to obtain evidence necessary to substantiate their damages actions, claimants have requested access to different categories of documents.  Below is a short overview of how the Commission and the EU Courts have addressed these requests.

i.        Full text of the Commission’s final decision

The Commission rejected an application by Schenker for full access to its decision in Case COMP/39.258 — Air Cargo.  On appeal, Schenker argued that the commercial information contained in the decision was no longer subject to protection, as the Commission notice on “access to file” provided that information which was more than five years old was no longer confidential.[xi]  The General Court rejected the argument, as the disclosure of documents gathered by the Commission in the context of proceedings brought under Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) undermines, in principle, the protection of the commercial interests of the companies involved in the procedure.  The Court also held that the exceptions set out in Article 4 of Regulation 1049/2001 could apply for a period of 30 years (or even more).[xii]

Schenker also claimed that the Commission should not have refused to grant access to the decision, as the investigation was closed at the time of the request.[xiii]  The General Court rejected this argument on the basis that appeals against the decision were still pending before the General Court when the Commission rejected Schenker’s request.[xiv]

As regards the protection of the commercial interests of the cartel participants, Schenker claimed that there was an overriding public interest in the disclosure of the decision, as the cartel affected a major economic sector and the public was entitled to be informed of the Commission’s activities in the field of competition law.  The General Court acknowledged the need to inform the public, but noted that this could not in itself justify the disclosure of the full text of the decision.[xv]

ii.        Non-confidential version of the Commission’s final decision

Schenker also claimed that, following its request, the Commission should have granted it access to a non-confidential version of its decision.  The Commission stressed that it could not have sent the applicant a non-confidential version on the date of the contested decision, as it was necessary first to determine, with the addressees of the decision, the information which had to be deleted from the decision.  Relying on Article 4(6) of Regulation 1049/2001, the General Court held that the Commission should have provided the applicant with the parts of the Air Cargo decision which were not subject to any request for confidentiality, without waiting for all of the requests for confidentiality submitted by the companies concerned to be settled.

iii.        Commission’s case file

In EnBW, the Court of Justice held that a general presumption applies to a request for access to documents in a file relating to Article 101 TFEU proceedings, as such proceedings imply the gathering of commercially sensitive information.[xvi]  Generalised access to the documents contained in the Commission’s file would jeopardise the balance which the EU legislature sought to ensure, in Regulations 1/2003[xvii] and 773/2004,[xviii] between the obligation of the companies concerned to submit possibly sensitive information to enable the Commission to investigate a given case, and the guarantee of protection for the information so provided to the Commission.[xix]

Among the documents gathered in the Commission’s file, leniency statements and documents provided in support of these statements are of a particular nature.  In Pfleiderer[xx] and Donau Chemie,[xxi] the Court of Justice held that the effectiveness of leniency programmes could be compromised if documents relating to a leniency procedure were disclosed to damages claimants.  Cartel participants would be deterred from relying on leniency programmes if faced with the possibility of disclosure of their documents.  On the other hand, access could not be systematically refused.  National courts should weigh up the interests involved and refuse disclosure only if there is a risk that a given document may actually undermine the public interest relating to the effectiveness of the national leniency programme.

iv.        Table of contents of the Commission’s case file

The table of contents of the Commission’s file includes references to the documents in the Commission’s file.  Claimants have sought access to tables of contents in order to identify more easily the documents which could be useful for the purposes of damages actions, production of which could then eventually be ordered by the court having jurisdiction over such actions.

In CDC Hydrogen Peroxide, the General Court examined whether the Commission’s refusal to grant access to the table of contents of the Commission’s file infringed Regulation 1049/2001.  The General Court ruled that the Commission had failed to establish that access to the table of contents was likely, specifically and effectively, to undermine the commercial interests of the cartel participants.[xxii]  It held that the table of contents could not itself be regarded as forming part of the commercial interests of the companies mentioned therein as authors of some of those documents, but if one of the columns in the table were to include commercially sensitive information, disclosure of the table of contents could be regarded as prejudicing the protection of the commercial interests of the infringing companies.  The General Court found that the Commission had not argued that this was the case,[xxiii]  and therefore annulled the contested decision on that basis.

In Axa Versicherung, the applicant contended that the Commission had wrongly refused to grant it access to the table of contents of the Commission’s file.  The General Court examined the applicant’s arguments relating to the different types of information included in the table of contents.  First, as regards access to references to the leniency documents, the General Court found that the Commission was entitled to rely on a general presumption to refuse to grant access to references to the leniency documents, even if the request at issue related only to a single document, i.e. the table of contents.[xxiv]  However, the General Court considered that: (i) the Commission was wrong to claim that the table of contents formed part of the case file and was therefore covered by the general presumption of inaccessibility;[xxv] and (ii) the Commission had not established that allowing the applicant complete access to references to the leniency documents in the table of contents would undermine the interests protected by the exceptions laid down in Article 4(2) of Regulation 1049/2001 and, hence, the Commission’s refusal was not substantiated to the requisite legal standard.

Second, as regards Axa Versicherung’s request for access to information relating to the identity of certain individuals included in the table of contents, the General Court considered that Axa had not provided reasons why it was necessary to access the information and that disclosure would, in any event, prejudice the legitimate interests of the relevant persons.

Third, in terms of access to the names of third-party companies, the General Court agreed with the Commission that the names of the companies operating in the car glass sector, or which had business dealings with the cartel participants, could not be made known to Axa as the disclosure of their identity and, therefore, their involvement in the proceedings, or their business dealings with the cartel participants, could damage their reputation and undermine their commercial interests.[xxvi]  The fact that the business dealings dated back more than five years was not sufficient to conclude that they were too “old” to be regarded as covered by the “commercial interests” exception laid down in Article 4(2) of Regulation 1049/2001.

3.     Regime under the Damages Directive

No doubt informed by the litigation (both at a national and EU level) concerning access to documents, the Damages Directive seeks to address the information asymmetry issue whilst granting protection to certain evidence, to avoid “fishing expeditions” or interference with ongoing investigations and to ensure companies’ continued willingness to approach competition authorities voluntarily with leniency statements or settlement submissions.

As the Directive provides for minimum requirements, Member States can adopt more elaborated rules.[xxvii]  However, the disclosure and protection of evidence shall conform to a number of principles.

National courts shall be able to order the defendant or a third party to disclose relevant evidence “upon request of a claimant who has presented a reasoned justification containing reasonably available facts and evidence sufficient to support the plausibility of its claims for damages”.[xxviii]  To avoid fishing expeditions, the disclosure of specified items of evidence or relevant categories of evidence shall be circumscribed as precisely and as narrowly as possible on the basis of reasonably available facts.   Disclosure shall be limited to what is proportionate in light of the legitimate interests of all parties and third parties concerned.[xxix]  If these conditions are fulfilled, national courts can order the disclosure of specified items of evidence or relevant categories of evidence, provided that confidential information is protected.[xxx]

Article 6 of the Directive harmonises the limits on the disclosure of certain categories of evidence:

  • National courts cannot at any time order a party or third party to disclose leniency statements and settlements submissions,[xxxi] which do not therefore require any weighing-up exercise as detailed in Pfleiderer and Donau Chemie.  In discussions surrounding the adoption of the Directive, the protection granted to the evidence provided by leniency applicants led to intense debate.  In the end, only leniency statements were afforded absolute protection.  That protection extends to “verbatim quotations from leniency statements included in other documents”, such as requests for information, though it remains to be seen how the notion of “verbatim quotations” will be interpreted.  The disclosure of pre-existing documents, submitted together with leniency statements to support the latter, may be ordered at any time under the conditions set out in the Directive.
  • National courts may order the disclosure of the following categories of evidence only after a competition authority, by adopting a decision or otherwise, has closed its proceedings:
    • information prepared by a natural or legal person specifically for the proceedings of a competition authority (e.g. a response to a request for information);
    • information that the competition authority has drawn up and sent to the parties in the course of the proceedings (e.g. a Statement of Objections); and
    • settlement submissions that have been withdrawn.[xxxii]

Documents which fall outside these categories can be disclosed by court order at any time.[xxxiii]

4.     What Next?

The regime introduced by the Damages Directive seeks to provide victims of competition law infringements with easier access to evidence, whilst preserving the attractiveness of public enforcement tools used by the Commission and national competition authorities (notably the leniency and settlement programmes).  Given the importance of these issues, implementation of the Directive by the Member States at the end of 2016 is unlikely to be the end of the story, and litigation on the exact parameters of the Directive and how its provisions are to be applied in practice is anticipated.

Acknowledgment

The authors greatly appreciate the valuable contribution of Julie Vandenbussche, lawyer at Shearman & Sterling, to this article.

Endnotes

[i]               Case C-453/99 Courage v Crehan, EU:C:2001:465, paras 25-26: “national courts whose task it is to apply the provisions of Community law in areas within their jurisdiction must ensure that those rules take full effect and must protect the rights which they confer on individuals […]. The full effectiveness of [Article 101 TFEU] would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition.” See also Cases C-295/04 to C-298/04 Manfredi v Lloyd Adriatico Assicurazioni SpA and others, EU:C:2006:461.

[ii]               Green Paper on damages actions for breach of the EC antitrust rules, COM (2005) 642 final, p. 4.

[iii]              White Paper on damages actions for breach of the EC antitrust rules, COM (2008) 0165 final.

[iv]              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, COM (2013) 404 final.

[v]               Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 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 (2014) OJ L 349/1.

[vi]              See Impact Assessment Report, SWD(2013) 203 final, para. 30.

[vii]             Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (2001) OJ L 145/43.

[viii]             Regulation (EC) No 1049/2001, Article 2.

[ix]              Article 4(1) provides that the institutions shall refuse access to a document where disclosure would undermine the protection of privacy and the integrity of the individual. Article 4(2) provides that the institutions shall refuse access to a document where disclosure would undermine the protection of (i) commercial interests of a natural or legal person, (ii) court proceedings and legal advice, or (iii) the purpose of inspections, investigations and audits, unless there is an overriding public interest in disclosure.  Article 4(3) provides that access to a document, drawn up by an institution for internal use or received by an institution, which relates to a matter where the decision has not been taken by the institution, shall be refused if disclosure of the document would seriously undermine the institution’s decision-making process, unless there is an overriding public interest in disclosure.

[x]               Joined Cases C-39/05 P and C-52/05 P Sweden and Maurizio Turco v Council, EU:C:2007:721, para. 49.

[xi]              Case T-534/11 Schenker v Commission, EU:T:2014:854, para. 63.

[xii]             Regulation (EC) No 1049/2001, Article 4(7).

[xiii]             Case T-534/11 Schenker v Commission, EU:T:2014:854, para. 69.

[xiv]             Id., para. 71.

[xv]             Id., para. 85.

[xvi]             Case C-365/12 P Commission v EnBW, EU:C:2014:112, para. 79.

[xvii]            Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 101 and 102 TFEU (2003) OJ L 1/1.

[xviii]           Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 101 and 102 TFEU (2004) OJ L 123/18.

[xix]             Case C-365/12 P Commission v EnBW, EU:C:2014:112, para. 90.

[xx]             Case C-360/09 Pfleiderer v Bundeskartellamt, EU:C:2010:782.

[xxi]             Case C-536/11 Bundeswettbewerbsbehörde v Donau Chemie and others, EU:C:2013:67.

[xxii]            Case T-437/08 CDC Hydrogene Peroxide v Commission, EU:T:2011:752, para. 50.

[xxiii]           Id., para. 45.

[xxiv]           Case T-677/13 Axa Versicherung v Commission, EU:T:2015:473, para. 94.

[xxv]            Id., para. 96, referring to Case C-365/12 P Commission v EnBW, EU:C:2014:112.

[xxvi]           Case T-677/13 Axa Versicherung v Commission, EU:T:2015:473, para. 148.

[xxvii]           Directive 2014/104/EU, Article 5, §8.

[xxviii]          Id., Article 5, §1.

[xxix]           Id., Article 5, §§2-3.

[xxx]            Id., Article 5, §4.

[xxxi]           Id., Article 6, §6. The Directive provides that it shall not affect the right of national courts to consider the interests of the effective public enforcement of competition law when ordering the disclosure of any type of evidence; with the exception, however, of leniency statements and settlement submissions (recital 24).

[xxxii]           Id., Article 6, §5.

[xxxiii]          Id., Article 6, §9.

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