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Recent developments on the position of leniency applicants in follow-on private actions for damages under European and national competition law




Written by Fraser Grier (4th year LLB)


I.                   Background


 The previous decade has witnessed an effort by the  European Commission to afford greater potency to private antitrust litigation; concurrently aiming to navigate between the gravity of private individuals’ interests and broader community-wide objectives of the internal market. A duet of landmark judgments[1] of the Court of Justice guarantees that any natural or legal person who suffers harm as a result of a breach of European antitrust rules under Articles 101 and 102 of the Treaty of the Functioning of the European Union must be able to claim reparation from the individuals (or “undertakings”) that cause harm to customers through collusive practices such as price fixing. The direct effect of the Articles gives rise to rights and obligations enforceable by individuals before national courts of Member States.[2] Awarding compensation is beyond the field of competence of the Commission and National Competition Authorities and within the remit of national courts applying civil law and procedure, thus laying the basis for private enforcement of EU competition law.[3]

 The Commission’s Impact Study pertinent to the recent Commission proposal on private action[4] estimates the total amount of potential compensation to victims lost due to ineffective private enforcement lies, in the most extreme assumption, at €23 billion each year across Member States.[5] The Commission’s previous White[6] and Green[7] papers mark an ambition to foster a claimant-friendly forum within the Union, culminating in the current proposal subject to assessment below. 

 Private action often arises from a “follow-on” procedure; where public enforcement proceedings have resulted in a finding of an infringement by cartel participants and subsequent fines imposed, opening up the cartelists as targets for private damages claims by individuals.[8] Of greatest relevance to this article is the preservation of effective leniency incentives; where cooperation and information sharing with Competition Authorities by suspected cartelists takes place in return for conditional immunity from fines or reduction.[9] The contention that shall be focused upon arises where ex post damage claimants are faced with an often insurmountable obstacle of proof of harm caused under national laws, yet the threat of potential disclosure of leniency documents by Competition Authorities to private parties poses a substantial disincentive for potential leniency applicants, compromising ex-ante public detection and prevention of cartels.[10]

 This article aims to outline current grounds of conflict, the position on disclosure of leniency evidence both under legislation and following the Court of Justice judgement of Pfleiderer,[11] and evaluate the provisions of the recent Commission proposal.


II.                Public and private enforcement


 The crevasse between public and private enforcement has been characterised by conflicting ethos. Public enforcement in the EU serves as an instrument of deterrence and punishment, whilst private enforcement is focused upon corrective justice in compensation for victims.[12]

 The promotion of the role of private action in antitrust enforcement potentially circumvents the influence of National Competition Authorities upon national competition policy,[13] leading to concern from leadership of the latter Authorities who wish to see priority afforded to leniency programmes over compensatory mechanisms for victims.[14] At the constitutional level, NCAs have traditionally been the primary navigators of competition policy within Member States. The role of courts thus far has been to ensure that administrative bodies act within the law, as opposed to public policy direction.[15]  The rise of a culture of private damages claims will cause a transition of power in the policy field to the courts, further testing the incumbent constitutional relationship.[16]

 Moeschel accords several advantages to public enforcement, notably the state sanctioned power to impose substantial fines upon infringing undertakings.[17] A strong example is offered in that the levying of up to ten per cent of world turnover of an undertaking, based on average operating margins in Europe, may eliminate profits for up to five years.[18] Accumulation of practice and efficiencies in specialisation may request lesser costs than private enforcement.[19] In the current armoury of investigation methods at the disposal of Member States, private enforcement meanwhile remains largely supplementary in nature.[20]  Advantages of the latter in this regard are posing as an additional deterrence to potential cartelists.[21] Leniency programmes in particular hold significant benefits for public enforcement, the most considerable being swift collection of intelligence and evidence through goal oriented inspections in premises.[22] Recognition of a violation by a number of cartelists aiming to secure immunity serves to mitigate costs of adjudication.[23] Furthermore, the incentive of a single undertaking to surrender information regarding cartel activity in return for a sole immunity guarantee weakens the confidence of undertakings to take part in collusive practices from the beginning.[24]


 III.              Current legal bases for leniency applications


 Since 2002 the Leniency programme of the Commission has proven itself as the most effective tool at its disposal for the detection of secret cartels.[25] The current EU leniency regime is governed by the Commission and NCAs forming the European Competition Network (ECN), acting under the procedural framework for antitrust of the 2006 Leniency Notice, Council Regulation 1/2003 and Commission Regulation 773/2004. The regime draws inspiration from models employed by the United States Department of Justice, focusing upon the cooperation of undertakings in submission of self-incriminating corporate statements and documentary evidence.[26] The 2012 Model Leniency Programme, without EU legislation in the area, reflects an attempt to align Member State leniency policy programmes.[27] This is of particular importance as leniency programmes remain a matter of idiosyncratic national policy than binding EU law. Where interstate effect of cartels is an issue, an applicant may have to apply to a number of NCAs, including the Commission itself, to escape liability, often creating “leniency dilemmas”.[28] In addition, forum shopping by parties for more favourable leniency conditions may lead to a decline in authority and consistency of competition law within the Union.[29]

Conflicts arise, for example, where national courts in private antitrust action request documents from the Commission in order to apply Articles 101 and 102 TFEU, by virtue of the duty of cooperation with Member State courts enshrined in Art 4(3) TFEU and Article 15 of Regulation 1/2003.  Alternatively, in inter partes actions, Member State courts may issue a request to defendants in national proceedings which are currently, or have been, under investigation by the Commission to disclose evidence before national courts.[30] 

 At present, protection is afforded to corporate statements under EU law through mechanisms such as oral submission of evidence, in order to ensure that only the Commission retains a transcript.[31] Corporate statements are issued to addresses within the Commission’s Statement of Objections only under secure circumstances, following assurance by recipients that the statements are used solely for the purposes of judicial or administrative proceedings for the application of EU competition rules.[32] Furthermore, the Commission “will not transmit to national courts information voluntarily submitted by a leniency applicant without the consent of that applicant”.[33]

The 2008 Commission White Paper called for enhanced protection for corporate statements submitted under the Leniency Notice, whilst other documents should be precluded under “investigative privilege” from disclosure to courts if the Commission or an NCA demonstrated to the court that an order obliging the disclosure of certain pieces or categories of evidence during a specified period of time would jeopardise an on-going investigation.[34]

 The Commission conceded that the mere fact of disclosure of evidence entailing unfavourable consequences for the addressee of the disclosure in parallel civil proceedings cannot constitute a reason to object to the disclosure order, so as to overcome the “information asymmetry” weighted against claimants in private damages cases.[35] While the Commission discourages the use of the Transparency Regulation[36] on the part of damage claimants seeking access to the file, as we shall see below, it cannot be excluded that damage claimants will pursue the transparency route to seek access to cartel evidence.[37] A European Ombudsman decision[38] highlights the difficult balancing exercise inherent in Regulation 1049/2001 (“the Transparency Regulation”) between the public interest of increasing the deterrent effect of EU competition law through effective private enforcement and the commercial sensitivity of evidence.

 Nevertheless, the Court of Justice has cast doubt over the uniformity of protection of leniency materials across all Member States in maintaining that national courts are to decide case-by-case on disclosure of information voluntarily submitted by leniency applicants.


 IV.              The Pfleiderer case


 The position at present was established in the seminal judgement of Pfleiderer. Here a claimant in national follow-on proceedings adversely affected by the conduct of several companies submitted an application to a National Competition Authority for access to leniency material. 

The Court of Justice firstly defends public enforcement; at paragraph 25 of the judgement it provides that “leniency programmes are useful tools if efforts to uncover and bring to an end infringements of competition rules are to be effective and serve, therefore, the objective of effective application of Article 101 TFEU”. Secondly, the Court counters with a riposte for private enforcement at paragraph 29; “actions for damages before national courts can make a significant contribution to the maintenance of effective competition in the European Union” with reference to Courage v Crehan. Nevertheless, the Court of Justice ruled that Article 101 TFEU and Regulation 1/2003 do not preclude access to documents relating to a leniency procedure involving the perpetrator of that infringement. It is for the national courts and tribunals on the basis of their national law to determine the conditions under which such access must be permitted or refused by weighing the interests protected by European Union law.[39]

 It should be noted here that the judgement ran contrary to the wishes of the Commission, who saw the threat of disclosure of leniency documents in follow on procedure as a substantial deterrent to potential applicants, despite any proof of their actual value in private enforcement.[40] National Competition Authority heads have also expressed a desire to protect material submitted under a leniency programme from disclosure.[41] In his Opinion prior to the judgement, AG Mazak proposed distinction between corporate statements and other pre-existing leniency documents which may be disclosed on a case by case basis.[42]

 Following the judgement of the Court of Justice in Pfleiderer, a number of European national courts have been given the opportunity to apply the principles set out therein, with a variety of outcomes. The lack of a unified system across Member States means that, in cases of parallel leniency applications, a damage claimant may elect to apply to claimant-friendly jurisdictions for disclosure of the leniency documents, before relying on them for damage claims in other jurisdictions, perpetuating the activity of “forum” or “document” shopping mentioned above.[43]

Despite the Court of Justice giving priority to the principle of national autonomy,[44] in the absence of any common principles or categories such as those proposed by the Commission and the Advocate General, leniency applicants will lack certainty on how national courts will treat requests for access and protect their leniency confessions from disclosure.[45] Indeed, lack of clarity has been further propagated by the General Court in the CDC [46] and EnBW [47] rulings. The former ruling concerned the full annulment of a Commission refusal to grant access to evidence containing leniency submissions under the Transparency Regulation (Regulation 1049/2001). The Court rejected the Commission’s justification regarding the protection of commercial interests as well as the protection of the purpose of investigations. In the latter case the Court rejected the same justifications on the basis that the Transparency Directive cannot be overlooked by reference to a potential negative impact on the Commission’s leniency programme.[48] In EnBW in particular, the Court adopted a sceptical viewpoint over whether the evidence at stake protected genuine commercial interest, or simply served to aid undertakings escape actions for damages in national courts.[49] Advocate Jääskinen’s Opinion in the recent case of Donau Chemie and Others[50] wrestles inconclusively with, on the one hand, the principles of the effect utile of providing remedies for victims of infringement under Article 19(1) TEU and Pfleiderer,[51] and the other the rights against self-incrimination of leniency applicants inherent in Article 47 of the Charter of Fundamental Rights and public policy.[52] Post-Pfleiderer, demands have multiplied for legislative intervention to stem uneven enforcement of EU antitrust law, in particular disclosure of evidence under leniency programmes, at national level.[53]


V.                Assessment of the  proposed Directive


The recently published Commission proposal for a Directive on damages actions[54] aims to accommodate the interests of both claimants and defendants in private damages actions. The proposal immediately moves to counter the ‘Pfleiderer stance held by the Court of Justice, in providing that national courts are prohibited from disclosure or permission of use of leniency corporate statements and settlements submissions to the Commission in any circumstances, echoing the Opinion of AG Mazák. National courts may order the disclosure, or permit the use, of “other information” prepared for use for or by a Competition Authority, for example the Statement of Objections, only after the authority has closed its proceedings or taken a decision.[55] Furthermore, before this point the evidence is rendered inadmissible.[56] These provisions answer to the principle that in civil damages context leniency cannot put cooperating applicants at a disadvantage compared to non-applicants, having voluntarily conceded liability before completion of the investigation.[57] Documents falling outside the above categories may be disclosed at any moment in time, albeit on the basis that doing so does not compromise Competition Authority proceedings; on the further condition of specificity of evidence requested as opposed to mere reference to type or category.[58]

A further issue addressed is the “information asymmetry” between defendants and claimants, with the latter burdened with the task of establishing a causal relationship between harm and the infringement of EU competition rules[59] as well as quantification of damages sought.[60] The impetus for greater invasiveness in obtaining evidence submitted to national authorities stems from the high cost of factual and economic analysis that victims are often compelled to carry out in order to obtain restorative justice,[61] yet more than 9 out of 10 cartels are indeed found to have caused illegal overcharges.[62] The proposal thus calls for a reversal of the burden of proof due to a rebuttable presumption emplaced upon the defendant, thus the evidential burden shifts to defendants, remedying the shortcomings in available evidence to the detriment of claimants establishing harm caused by the cartelists.

A key goal of the proposal is harmonisation of national laws, evident in the legal bases of the Directive being stated as Article 114 TFEU, in conjunction with Article 103.[63] Additionally, a primary focus stated by the Commission is the ascertainment of a minimum level of effective access to evidence to equip both claimants and defendants.[64]


VI.              Conclusion


It would appear that the stalling of the Commission’s progress towards a stronger private enforcement culture within the Union may be rectified through binding legislative measures to achieve uniformity in application of national and EU antitrust law.

 The Commission identified that limited access to evidence by cartel victims in the Member States is one of the main procedural hurdles to obtaining full compensation.[65] Despite its claimant friendly agenda, the provisions of the proposal show a regard for safeguards against weakening leniency mechanisms under public enforcement. Further aspects that space has precluded discussion are fundamental rights considerations under the European Convention on Human Rights and Charter of Fundamental Rights regarding the right to a fair trial raised in the Donau Chemie case. Nevertheless, the proposal presents a bold attempt to resolve the dichotomy in ethos of public and private enforcement, yet it remains to be seen whether the provisions hold fast in enabling the principles championed by the Court of Justice in Courage v Crehan; that of effective provision of redress under Articles 101 and 102.


[1] Courage v Crehan [2001] ECR 1-6297 and Manfredi [2006] ECR 1-6619

[2] Article 6 of Council Regulation No 1/2003 of 16 December 2002

[3] Explanatory Memorandum of the Proposal for a Directive of the European Parliament and of the Council 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, 2013/0185 (COD), 2

[4] Ibid.

[5] Executive Summary of Impact Assessment: Damages actions for breach of the EU antitrust rules, SWD(2013) 204 final, 4

[6] White Paper on damages actions for breach of the EC antirust rules, COM/2008/0165

[7] Green paper on damages actions for breach of the EC antitrust rules, COM(2005) 672

[8] Wils, W.P.J. 'The Relationship between Public Antitrust Enforcement and Private Actions for Damages' (2009) 32 World Competition, Issue 1, 3–26,  5

[9] Commission Notice on Immunity from fines and reduction of fines in cartel cases, 2006/C 298/11

[10] Stakheyeva, H ‘Removing Obstacles to a More Effective Private Enforcement of Competition Law’[2012] G.C.L.R , Issue 2, 68 – 75, 74

[11] Pfleiderer AG v Bundeskartellamt (Case C-360/09) ;  [2011] WLR (D) 196

[12] Wils, W.P.J ‘The Relationship between public antitrust enforcement and private actions for damages’ (2009) World Competition 3, 15

[13] Wilsher, D ‘Reconciling the Public and Private Dimensions of Competition Litigation in the European Union’ [2011] 4 G.C.L.R, Issue 2, 89 – 98, 90

[14] Resolution of the Meeting of Heads of the European Competition Authorities 23 May 2012 “Protection of leniency material in the context of civil damages actions”

[15] Wilsher ‘Reconciling the Public and Private Dimensions, 90

[16] Ibid.

[17] Moeschel, W ‘Should Private Enforcement of Competition Law Be Strenghtened?’ [2013] G.C.L.R. Issue 1, 1 – 6,  3

[18] Ibid.

[19] Ibid.

[20] Wils, W.P.J ‘Leniency in Antitrust Enforcement: Theory and Practice, (2007) 30 World Competition 25- 64

[21] Moeschel, W ‘Should Private Enforcement of Competition Law Be Strenghtened?’, 4

[22] ICN Anti-Cartel Enforcement Manual, 2009. Chapter 2, para 2.2

[23] Ibid.

[24] Caruso, A ‘Leniency Programmes and Protection of Confidentiality: The Experience of the European Commission’ Journal of European Competition Law & Practice  (2010) 454

[25] Stefano, S ‘Access of Damage Claimants to Evidence Arising out of EU Cartel Investigations: A Fast-evolving Scenario’ [2012] G.C.L.R Issue 3, 95 -110, 101

[26] Caruso, A ‘Leniency Programmes and Protection of Confidentiality’, 454

[27] ECN Model Leniency Programmes as revised November 2012, Explanatory Notes, para 6 – 9

[28] See Thyssenkrupp Nirosta v Commission (C-352/09 P)

[29] Wilsher, D ‘Reconciling the Public and Private Dimensions of Competition Litigation in the European Union’ , 90

[30] Caruso, A ‘Leniency Programmes and Protection of Confidentiality’

[31] Van Bael and Bellis, Competition Law of the European Community (Alphen aan den Rijn: Kluwer Law International, 2010), p.1137

[32] Stefano, S ‘Access of Damage Claimants to Evidence Arising out of EU Cartel Investigations: A Fast-evolving Scenario’

[33] Commission Notice on cooperation within the Network of Competition Authorities (2004/C 101/03) paragraph 26.

[34] White Paper on damages actions for breach of the EC antirust rules, COM/2008/0165, paragraph 2.9

[35] F. Rizzuto, “Leniency and Damages Actions: The Impact of Recent European Union Court Jurisprudence” [2012] G.C.L.R. 1

[36] Ibid.

[37] Ibid.

[38] 3699/2006/ELB

[39] Pfleiderer, paragraph 33

[40] Judgment of the General Court of 22nd May 2012, Case T-344/08 ENBW paras 72 – 73, Nielen M.G. ‘Leniency material unveiled? Access by cartel victims to Commission and NMa files from a perspective of EU fundamental rights and cartel enforcement’ Science Shop, Faculty of Law, Economics and Governance (University of Utrecht, 2013)

[41] Resolution of the Meeting of Heads of the European Competition Authorities of 23 May 2012 “protection of leniency material in the context of civil damages actions”

[42] Opinion of A.G. Mazák in Pfleiderer (C-360/09) at paragraphs 16–17, 44, 46, 47 and 48

[43] Stefano, S ‘Access of Damage Claimants to Evidence Arising out of EU Cartel Investigations: A Fast-evolving Scenario’, 103

[44] See Pfleiderer (C-360/09) at paragraphs 20 and 23

[45] F. Rizzuto, “Leniency and follow-on private actions for damages: Comment on the Opinion of the Advocate General in the Pfleiderer Case” [2011] G.C.L.R. 99

[46] [2006] OJ L353/54

[47] EnBW (T-344/08) May 22, 2012, not yet reported.

[48] Ibid. at paragraph 125

[49] EnBW (T-344/08) May 22, 2012, not yet reported, at paragraph 147

[50] AG C-536/11, not yet reported

[51] Ibid. paragraph 51

[52] Ibid. paragraphs 55 and 56

[53] “EU needs legislative solution to whistle-blower files access, AG Mazák says” (MLex, February 24, 2012)

[54] 2013/0185 (COD)

[55] Proposal for a Directive of the European Parliament and of the Council 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, 2013/0185 (COD), Chapter II, Disclosure of Evidence

[56] Ibid.

[57] Commission Notice on Immunity from fines and reduction of fines in cartel cases (2006/C 298/11), paragraph 6

[58] Explanatory Memorandum of the Proposal for a Directive of the European Parliament and of the Council 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, 2013/0185 (COD), 15

[59] [2001] ECR 1-6297

[60] Explanatory Memorandum of the Proposal for a Directive of the European Parliament and of the Council 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, 2013/0185 (COD), 18

[61] Ibid.

[62] Ibid

[63] Ibid. 9

[64] Ibid. 14

[65] White Paper on damages actions for breach of the EC antirust rules, COM/2008/0165, 4 - 5




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