After a long legislative journey, the EU Council and Parliament finally adopted Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for damages under national law for infringement of the competition law provisions of the Member States and of the European Union.
The Directive is a first step in the process of harmonisation of national legislation on claims for damages. The transposition of the Directive into our legal system should be effective before 27 December 2016.
Despite a significant number of judicial rulings against companies for practices restricting competition, few follow-on actions have been implemented to compensate damages and even fewer stand-alone actions for damage compensation claims.
Hence, the purpose of the Directive is to ensure that any victim of a breach of Articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU) can file a claim against the offender for full compensation for the damages that this practice may have caused.
In the absence of EU legislation regarding the form of redress, it is up to the legal system of each Member State to regulate the exercise of this right.
It should be noted that Directive 2014/104/EU states that all civil judges hearing suits for damages are bound by the final decisions handed down by the national competition authority as regards infringement of competition law.
The injured party is entitled to compensation for actual loss (damnum emergens), lost profits and interest, returning it to the situation that would have existed if the illegal act had not been committed.
Regarding calculation of damages, the EU insists on adherence to the principle of effectiveness, i.e. the regulation should not make it unduly difficult or economically unaffordable for the affected party(ies) to receive compensation. It likewise calls for adherence to the principle of equivalence, i.e. laws must not be less favourable than those governing claims for damages arising from breaches of similar rights.
Although neither Community nor national law define a methodology for the economic quantification of damages, the burden of proof and precise amount of the damage claimed by the injured party must be backed by relevant economic studies and judges may request independent economic reports quantifying this amount.
Solchaga Recio & asociados apply economic theory to demonstrate the effects of a rise in price caused by a cartel or the effects of a loss of market share resulting from practices restricting competition, all with a bearing on the amount of damages requested. Our reports identify the three types of quantifiable damage
- the pass-on effect;
- the overpricing or damnum emergens effect, and
- the volume or lost profit effect.