Settlement in Competition Law and Compensation Claims

Between 2002 and 2007, these companies had participated in coordinated increases of the retail price of household products, perfumes and hygiene products.

This decision is available on the website of the Belgian Competition Authority.

The aim of this article is to present, on the one side, the settlement mechanism open to the Auditorat, and on the other, the possibility for the victims of these practices to obtain damages.

1. The Settlement

Like the normal procedure for competition-restricting practices, the settlement procedure includes a pre-procedure phase and a decision phase.

1.1. Pre-Procedure Phase

The Economic Law Code (CDE) authorises the Auditorat to suggest that companies commence a settlement procedure, and this at any time during the procedure, but before the submission of the Auditorat’s draft decision to the President of the Belgian Competition Authority under the traditional procedure. If the company is unwilling to commence discussions, this signals the end of the settlement procedure.

If the companies are willing to conduct discussions in order to reach a settlement, the auditorat identifies the complaints, gives the companies access to evidence, information and non-confidential documents, and indicates the range of the fine which it envisages proposing to the Competition Commission (Collège de la Concurrence).

The companies then proceed to a declaration of settlement through which they must acknowledge their involvement in the cited breach and their responsibility, and accept the sanction presented.

1.2. Decision Phase

After this pre-procedure phase, the Auditorat will notify the companies of the draft settlement decision, and, if the practice restricts competition in the Internal Market and is likely to affect business between Member States of the European Union, the European Commission. 

It should be noted that for calculating the amount of the fine, the Auditorat may take into account the commitment of the company or business association concerned to payment of damages.  It may also decide to apply a 10% reduction to the amount of the fine for companies which have acknowledged the breach mentioned in the decision and the sanction imposed on them. This was the case in the decision under discussion.

It should be noted that in the case of the 18 companies ordered to pay the fine, three of them were able to benefit from a partial or complete exemption, due to the role that they played in denouncing the practice. They actually benefited from the leniency programme. This provision encourages any company to be the first to denounce a restrictive practice whilst requesting leniency, in order to obtain complete exemption from a fine.

When the companies have confirmed that the draft settlement decision reflects the contents of their declaration of settlement and the acceptance of their sanction, l’auditorat takes a decision which includes the fine, and notifies it to the companies, and where necessary the complainants, thereby completing the procedure.

1.3. Equivalence to a decision of the Competition Commission

It is important to point out that a settlement decision is equivalent to a decision of the Competition Commission. Moreover, this decision will be published in the Belgian Official Gazette and on the website of the Belgian Competition Authority.

Finally, it should be noted that the companies concerned cannot seek redress against the settlement decision.

2. Action for Compensation

The possibility for victims of a breach of competition law, whether consumers, companies or public authorities, to obtain damages was enshrined in Directive 2014/104/EU of the European Parliament and 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.

2.1 Obtaining necessary evidence

Amongst others, the Directive makes it easier for victims to obtain the necessary evidence for their claim. Also, under certain conditions, the national judges were granted the power to order companies which have committed an infringement of competition law or third parties, to divulge relevant evidence in their possession. This power must be exercised in a proportionate manner respecting confidentiality.

2.2 Final decision of a national competition authority establishing a breach will constitute automatically irrefutable proof

Furthermore, the final decision of a national competition authority establishing a breach, will automatically constitute irrefutable proof in the country of the authority of the existence of an infringement of competition law. A decision pronounced by the competition authority of another country will count as prima facie evidence of the infringement.

2.3 The Directive provides rules relating to limitation, the minimum period of which will be 5 years.

This period only commences once the infringement has ceased and once the victim could reasonably have learned of the infringement, of the loss caused by it and the identity of the contravening companies.

The fact of a procedure being before a national authority constitutes a cause for suspension of limitation. The same applies in the event of a consensual resolution procedure initiated by the parties and enshrined in the Directive.

2.4 Joint responsibility

The Directive establishes a joint responsibility of each of the companies which has infringed competition law by their joint conduct. Therefore, they are each obliged to compensate the entire damage.

2.5 Full compensation of the loss suffered

Finally, according to the Directive, each natural or legal entity can claim full compensation of the loss suffered, whether or not he/it is a direct or indirect purchaser of the party committing the breach.

Nevertheless, the Directive foresees measures which are more oriented towards companies. In fact, a company which has breached competition law is not obliged to compensate the direct purchaser for his loss, if it can demonstrate that the buyer recuperated all or part of the extra cost resulting from the infringement from its own customers. In certain circumstances, there is also an irrefutable presumption, in favour of infringing companies, that the indirect purchasers have recuperated the extra cost.

3. Conclusion

The Auditorat has therefore passed a first settlement decision in a case involving a large number of major companies from the supermarket sector and suppliers of perfumes and hygiene products. 

The fines are high even if we cannot compare them with the benefits of the restrictive practices which were committed.

Will this settlement system, with a leniency programme for companies which denounce practices, permit other infringements to be discovered? Only time will tell whether this procedure will gain the hoped for success, or whether the decision under discussion will remain a one-off.

The 2014 Directive favours victims of these restrictive practices, whether they are consumers, companies or public authorities, and grants them numerous rights.  

Belgium has until 27 December 2016 at the latest to transpose them into Belgian law.