In March 2019 the Court of Justice issued two interesting judgments on the private enforcement of competition law.
In its judgment of 14 March 2019 in the Skanska case (C-724/17), the Court found that defendants may not use corporate restructurings to escape responsibility for damage caused by an infringement of the EU competition rules.
In the case at hand, a cartel was set up between 1994 and 2002 in the Finnish asphalt market. In 2009, the Finnish Administrative Supreme Court had imposed fines on several parent companies that continued the economic activity of cartel participants that had been dissolved. Based on this judgment, the City of Vantaa brought an action for damages against, inter alia, the parent companies at issue.
Under Finnish law, only the legal entity that caused the damage can be held liable, whereas the case law of the Court of Justice allows any person to claim compensation for damages resulting from an infringement of Article 101 TFEU. In this context, the Finnish Supreme Court decided to request a preliminary ruling to the Court of Justice.
In its judgment, the Court confirmed that the determination of the entity that is required to provide compensation is governed by EU law. The Court then underlined that actions for damages for infringement of EU competition rules, form an integral part of the enforcement system of these rules. To ensure full effectiveness of Article 101 TFEU, the identification of this entity must be based on the same notion of ‘undertaking’ that is used in the context of the imposition of fines.
The Court therefore concluded that Article 101 TFEU requires that a parent company is liable for the damage caused by its dissolved subsidiary, when all the shares of the latter were acquired by the parent and the parent continues the economic activity of the dissolved subsidiary.
In the Cogeco case (C-637/17), the Court of Justice has issued a judgment on the first request for a preliminary ruling on Directive 2014/104 (“EU Damages Directive”).
In February 2015, Cogeco Communications filed an action for damages against Sport TV Portugal before the District Court of Lisbon. Cogeco claimed damages based on a decision of the Portuguese Competition Authority of June 2013 stating that Sport TV had abused its dominant position in the market of premium sport TV channels. Sport TV Portugal had sought the annulment of this decision before the Portuguese Competition, Regulation and Supervision Court. The latter partially upheld Sport TV’s action. This judgment was eventually confirmed by the Court of Appeal of Lisbon in March 2015.
In view of the Portuguese time limits applicable on non-contractual liability, Sport TV argued that Cogeco’s claim was time-barred. The District Court of Lisbon decided to stay the proceedings and referred several questions to the Court of Justice.
In its judgment of 29 March 2019, the Court underlined that the action for damages was brought before the expiry of the deadline for transposing Directive 2014/104 and before the actual transposition of that directive into the Portuguese legal order. Moreover, Article 22, paragraph 1 of the EU Damages Directive prohibits the retroactive application of national measures adopted to comply with the substantive provisions of the Directive. Consequently, the Court concluded that the EU Damages Directive is not applicable to the dispute at issue.
The Court nonetheless went on to recall the direct effect of Article 102 TFEU and stressed that the full effectiveness of this disposition would be put at risk if it were not open to any individual to claim damages for loss caused by abusive conduct of a dominant undertaking liable to restrict or distort competition.
The Court continued that in the absence of EU rules, it is for the Member States to lay down the detailed rules governing the exercise of the right to claim compensation for such damage, including the limitation periods. The Court however stated that those rules may not jeopardise the effective application of Article 102 TFEU. In the light of these principles, the Court concluded that Article 102 TFEU precludes a national rule (such as the Portuguese) which provides for a limitation period of three years which (i) starts to run from the date on which the injured party was aware of its right to compensation (without the infringer being known) and (ii) cannot be suspended or interrupted during proceedings before the national competition authority. Such limitation period indeed renders the exercise of the right to full compensation practically impossible or excessively difficult.
With these judgments the Court of Justice once again reaffirms the crucial role actions for damages play in the effective enforcement of competition law.
For further information on the private enforcement of competition law and/or for general legal advice relating to competition law issues, please contact Pierre de Bandt.