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The ECJ Clarifies Temporal Scope Of Considerations On Actions For Damages Incurred Due To Cartel Activity – Cartels, Monopolies

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On 22 June 2022, the European Court of Justice (the
“ECJ”) responded to a request for
preliminary ruling from the Provincial Court of Léon in
Spain (the “Provincial Court”). The
Provincial Court’s request emanated from the proceedings
concerning Volvo AB & DAF Trucks NV
(“V&D”) and RM, whereby RM brought
an action for damages seeking compensation from V&D due to
their participation to a cartel existing between 1997 and 2011,
which is contrary to Art. 101 of the Treaty on the Functioning of
the European Union (“TFEU”). The request
brought forward by the Spanish Court sought clarifications on the
temporal scope of the rules governing the following three
components when considering an action for damages due to the
existence of a cartel:

  1. The limitation period for bringing an action for damages;

  2. The quantification of the harm incurred; and

  3. The rebuttable presumption of the existence of harm resulting
    from a cartel.

Background

During 2006 and 2007, RM had purchased three trucks which were
manufactured by V&D. Circa a decade later, the European
Commission (the “Commission“) issued a
decision on 19 July 2016, whereby it deemed V&D to have
participated to a cartel lasting between 1997 and 2011, wherein the
participators agreed on, inter alia, fixing the prices of
the trucks they sold, thereby infringing Art. 101 of the TFEU (the
“Decision”). Upon being informed of the
Decision, RM sued V&D before the Commercial Court of
Léon in Spain (the “Commercial
Court”
) on 1 April 2018, seeking compensation for the
harm it suffered because of the cartel.

From a procedural standpoint, the Commercial Court considered
RM’s action to be admissible, as it considered RM’s action
to be within the 5-year limitation period prescribed by the Spanish
legislation transposing Article 10(3) of Directive 2014/104
governing actions for damages incurred from infringements of
competition law (the “Directive”). The
Commercial Court also found RM’s action to be substantively
well-founded, relying on Article 17(2) of the Directive which
establishes the rebuttable presumption that cartels cause harm to
those affected by them. Considering the above, the Commercial Court
ordered for V&D to pay RM compensation. V&D appealed this
judgement before the Provincial Court, arguing that the action is
time-barred since the cartel had ceased before the transposition of
the Directive into Spanish law. Said appeal led to the request for
the preliminary ruling at hand.

The ECJ’s Assessment

The ECJ firstly referred to Article 22 of the Directive, which
establishes the temporal applications that national courts are to
follow when transposing the Directive’s measures. Article 22
distinguishes between the temporal application to substantive and
non-substantive provisions adopted in light of the Directive. In
relation to the former, their retroactive application is expressly
prohibited, whereas for the latter, their application is only
allowed in relation to actions for damages brought after 26
December 2014.

Following the above, the ECJ delved into the temporal
applicability of Article 10 of the Directive, which governs the
limitation periods that Member States are to implement when they
transpose the Directive, to the case at hand. The ECJ firstly
established that Article 10 is a provision of substantive nature
since its interpretation may determine the outcome of the legal
action. The next step was to analyse whether Article 10 was applied
retroactively in the case at hand.

It was noted that the Directive, whose transposition into
Spanish law had a deadline fixed on 27 December 2016, was actually
transposed into Spanish law 5 months later. To identify the
temporal applicability of Article 10, the ECJ had to firstly
identify whether the limitation period which was applicable to the
case at hand had elapsed prior to the expiry date for the
Directive’s transposition. Prior to the Directive’s
transposition, the Spanish provisions in force at the time had
prescribed a one-year limitation period to cases of this sort, and
the limitation period would have begun to run once the infringement
would have ceased and the injured party would have been reasonably
expected to know that s/he has; incurred harm; identified the
causal link between the harm incurred and the infringement of
competition law; and identified the identity of the person
committing said infringement. On this front, the ECJ established
that the limitation period in this case had commenced on the day in
which the Commission had published a summary of the Decision, which
was 6 April 2017, since said summary contained all the information
that RM needed to bring an action for compensation based on an
infringement of Art. 101 of the TFEU. Considering the above, the
ECJ concluded that RM’s action falls within the temporal scope
of Article 10 of the Directive, since the limitation period
applicable under the old Spanish laws had not elapsed prior to the
expiry date for transposing the Directive into Spanish law.

The ECJ then analysed the temporal applicability of Article
17(1) of the Directive, which basically authorises national courts
to estimate the amount of damages incurred by an injured party when
it is excessively difficult to quantify the damages incurred by an
injured party. In this regard, the Court ascertains that this is a
provision of a procedural nature, since it relates to determining
the standard of proof required. Given that RM brought his action
against V&D on 1 April 2018, and the temporal application to
non-substantive provisions are allowed if they are brought after 26
December 2014, the ECJ confirmed that RM’s action is within the
temporal scope of Article 17(1) of the Directive, despite the
cartel ceasing prior to the entry into force of the Directive.

With regards to Article 17(2) of the Directive, the ECJ noted
that it is a provision of a substantive nature as the incurrence of
harm is one of the necessary elements for a claim of civil
liability, and so the presumption of harm imposed by said article
may influence the outcome of a legal action. Due to its substantive
nature, the ECJ concluded that Article 17(2) is not temporally
applicable to RM’s action. This is because the element which
gives rise to the presumption of harm under Article 17(2) is the
existence of the cartel, and so the fact that the cartel ceased
prior to the transposition of the Directive, its application in
this case would be retroactive, and therefore, prohibited.

Having received the above interpretations from the ECJ, the onus
of deciding how the case between RM and V&D is to proceed has
now reverted onto the Provincial Court.

This article was first published in the Malta
Independent.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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