We need to start from the idea that anti-competitive practices, or abusive conduct by dominant operators, can cause damages at two different levels. Let us take as a reference for example, agreements between competitors to fix prices or distributing customers or sales territories amongst themselves. The most recent case was the Decision of the European Commission of 19 July 2016, which imposed a fine of more than 2,900 million euros on a cartel formed by Volvo-Renault, Daimler, Iveco, DAF and MAN for making agreements that broke the rules on free competition by colluding on the overpricing of their trucks between 1997 and 2011.
On one hand, this type of conduct is contrary to the general interest, since it sets out to distort the competitive order of the markets, and is punishable by the State, which imposes fines.
But at the same time, it cannot be denied that unlawful competitive practices can also have an adverse financial impact on individuals, affecting the private interests of end consumers or the companies that are the victims of overpricing. The problem is that, until now, protecting the rights of private injured parties has not been given specific attention, and came under the general category of extracontractual civil liability.
Directive 2014/104/UE of the European Parliament and the Council, of 26 November 2014, aimed to establish effective legal mechanisms that would make it possible to claim for damages caused as a result of infringements of competition Law by eliminating the obstacles to taking legal action. The so-called “sugar case”, decided in the Supreme Court Judgment of 7 November 2013, is typical, since those affected by collusion to fix the price of sugar for industrial use waited 14 years to obtain compensation.
In the Department of Commercial Law of Belzuz Abogados, we were waiting for the transposition of this Directive, which finally took place with the Royal Decree-Law 9/2017 of 26 May, which establishes a new way in which, for example, those affected by a price-fixing cartel (including both the direct, and indirect buyer or final consumer) can file a claim and seek compensation for quantifiable damages caused by the conduct of the cartel, so they now have an active role to play, and are no longer mere observers of the action taken by the authorities.
The spirit of the Directive that has been transposed can be seen in two different areas:
Firstly, the amendment of the Defence of Competition Act established a new system of liabilities. In particular, the new Royal Decree establishes the joint and several liability of all the offenders, (including the liability of the parent company for infractions committed by a subsidiary), in contrast to what happened previously, when each company that belonged to a cartel was only answerable for their part of the damages.
In the same way, there is now recognition of full compensation for the injured parties affected by infringements of competition law (including consequential losses, loss of earnings and interest) and fixes the limitation period for actions to claim damages at five years, a period which will start when the infringement of competition Law has ceased, and the claimant becomes aware, or could reasonably have become aware, of: a) The conduct and the fact that it constitutes an infringement of competition Law; b) the damages caused by the aforementioned infringement; and c) the identity of the offender.
The second key aspect of the Royal Decree is the new procedural rules that govern obtaining evidence in proceedings to claim damages for the infringement of competition Law. In particular, the provision on access to sources of evidence stands out: this regulates, amongst other matters, who can request measures to obtain access (both the offender and the injured party), possible measures that can be requested, the procedure for their adoption, their execution and the consequences of obstructing said measures. It is regrettable, however, that the law maker has not taken advantage of this reform to introduce the comprehensive regulation of a phase for documentary disclosure prior to the court hearing. It has eliminated the existing preliminary proceedings and submission of documents, but has created instead a sort of patch, a specific procedure for proceedings arising from infringements of competition law.
On this point, attention should be drawn to the true nature of the new article 283 bis of the new Code of Civil Procedure, which seeks to avoid indiscriminate demands for documents to be produced.
The claimant can only ask the judge to require the counterparty or third parties to produce “categories” of documents, defined by nature, content or date, that are necessary to uphold their claim, limiting the exhibition of evidence to the principles of proportionality, necessity and suitability, and establishing specific rules to ensure the confidentiality of the evidence to which the claimant has access. In short, claimants will still have to prove that they have suffered specific damage and quantify it, and that said damage has been caused by the infringement.
Nevertheless, a major shortcoming of the new text is that it fails to expressly acknowledge its retroactive application, and there are doubts about how it will be interpreted by the Courts. Thus, a conservative reading suggests that it will only apply to cartels that are discovered from now on. What will happen, however, with those that were discovered, for example, last year (as in the case of the trucks) or between January and May this year, in view of the Spanish Government’s delay in transposing the Directive by precisely those five months? The uncertainties concerning the application of the limitation period established in the new law are evident.
To sum up, the Department of Commercial Law at Belzuz Abogados is always available to our clients to clarify and explain in greater detail all those specific aspects of the new legislation that relate to the requirements for filing a claim for damages for infringements of competition law. We will be paying particular attention to the initial experiences of how the reform is applied by the courts, which will tell us how Spanish judges are interpreting this new procedural framework.
Belzuz Abogados SLP
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