Can victims of infringements of competition law take action for damages?

Analyse The law of 6 June 2017 facilitates the action for damages for victims of infringements of competition law.

Consequently, any company, consumer and consumers’ association that suffers harm, can claim compensation for harm suffered against an infringing company.  It is for example possible in case of cartel or abuse of dominant position. In turn, companies have all the more reason to verify if they are complying with the competition law. The goal of the law is the transposition of the European Directive 2014/104/EU of 26 November 2014 governing this matter.

In a previous article, we had already approached the innovations brought by this directive upon the first settlement decision rendered by the Auditorat of the Belgian Competition Authority sanctioning 18 companies that had participated between 2002 and 2007 in coordinated increases of the retail price of household products, perfumes and hygiene products in Belgium and imposing fines totalling EUR 174,000,000.

1.    Issue

The European Commission and the national competition authorities can find infringements of the competition law (for example a cartel or an abuse of dominant position in a market) and impose fines to the companies in question. 

However they cannot grant damages to companies and citizens who are affected by those behaviours.

It is up to the national courts to examine the claims for damages caused by infringements of competition law.

The exercise of such actions remained however up to now theoretical. It was indeed difficult for the victims seeking for compensation to access the evidence that would be useful in establishing the infringement, to prove the extent of that harm or to avoid the problems related to statute of limitation.

2.    The main innovations of the law of 6 June 2017

The European Directive proposes several solutions to those pitfalls. 

Those solutions are taken over in the Belgian law in order to be incorporated in the Economic Law Code. 

The main measures are the following:

  • The victims who have suffered damage through an infringement of competition law have the right to full compensation for actual loss, for gain of which they have been deprived, plus interest.
  • A rebuttable presumption that cartel infringements cause harm is established along with an irrefutable presumption attached to the infringement found by a final decision of the Belgian Competition Authority.

    In that case, the consumers and companies will not have to prove to the court the existence of the infringement of competition law.

    In this context, it is important to note that a final decision founding an infringement of competition law rendered in another member state of the European Union by a national competition authority or its review court does not create a presumption but is accepted at least as prima facie evidence of the fact that an infringement of competition law has occurred and can be examined with the other pieces of evidence brought by the parties.

    Finally, according to the Court of Justice and the Council Regulation (EC) n°1/2003, a decision of the European Commission sanctioning an anti-competitive behaviour constitutes binding proof that the behaviour took place and was illegal. Any person or company affected by such behaviour may bring the matter before a national court and seek compensation.
  • The judge has the power to order the disclosure of certain evidence with regard to the parties or third parties (or the Belgian Competition Authority if neither the parties, nor the third parties can reasonably provide the evidence), limited to that which is proportionate, while ensuring the protection of confidential information along with an absolute or partial protection of certain evidence in the file of a competition authority. Penalties in the event of failure with the disclosure order or destruction of pertinent evidence are also provided for.
  • The fact that, if an infringement caused increases of the prices and that those overcharges have been passed on along the supply chain, the persons who will have suffered ultimately the harm will have the right to benefit from compensation. However, the company will not be bound to compensate its direct purchaser when it can demonstrate that the direct purchaser has passed on all or part of the overcharge on its own purchasers.
  • If several undertakings infringe the competition law jointly, those infringers will be held jointly and severally liable for the entire harm caused by the infringement. It means that the injured party can require the full compensation for the harm from any of the companies at fault. It should be noted that there is derogation for small or medium-sized enterprises and immunity recipients, which are, under certain conditions, only liable to their direct or indirect purchasers. Companies, which have made an consensual settlement further to a mediation, conciliation or arbitration process, are in principle not jointly and severally liable anymore.
  • Several rules of procedure favour the bringing of an appeal and the consensual dispute resolution:
    • The compensation procedure will be suspended for a duration of maximum 2 years in case of a consensual dispute resolution.
    • The application of rules determining when the limitation period begins to run, effectively allowing the initiating of claims for compensation for infringements of competition law.  
      The limitation period begins to run as from the day following the day when the infringement of competition law has ceased and when the claimant knows, or can reasonably be expected to know, the behaviour constituting the infringement of competition law, the fact that the infringement of competition law caused the claimant harm, and the identity of the infringer.
    • The limitation period will be suspended for the duration of a whole consensual dispute resolution process.

3.    Consumers’ associations

The new rules also facilitate consumers’ associations to bring a class action for compensating the consumers suffering harm by an anti-competitive behaviour. 

The scope of the class action is explicitely expanded to the infringements of competition law covered by the new provisions of the Economic Law Code.

4.    Conclusion

The introduction of these new rules in the Economic Law Code will allow favouring the actions for compensation by the persons and companies injured by an anti-competitive behaviour.

The consumer will have the choice to bring an action for damages himself or in the framework of a class action.

On the other hand, any harmed company will be able to bring an action supposing that it has not passed on the overcharges on its own clients. 

It will be interesting to follow the practical application of those new rules further to the next decision of the Belgian Competition Authority.

We will keep you informed of this matter.

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Leo Peeters

Leo Peeters