New CJEU ruling on damages arising from collusive conduct: legal costs in 'antitrust' litigation and requirements for the judicial estimation of damages
Spain Litigation and Arbitration Commentary
The CJEU rules on the fifth question for preliminary ruling referred by a Spanish court in relation to proceedings for damages arising from the truck manufacturers' cartel.
The Court of Justice of the European Union (CJEU) has delivered a judgment in Case C-312/21, ruling that: (i) Article 394. 2 of the Spanish Law 1/2000 on Civil Procedure (“Spanish law” or “LEC”) -which provides that, in the event that a claim is partially upheld, each party shall bear the costs incurred at its own instance and split common costs evenly - is compatible with EU law; and furthermore, (ii) specifies that neither the fact that the claimant was offered access to the data on which the defendant’s expert relied, nor that the claim is related to goods acquired from another manufacturer, other than the defendant are, by themselves, sufficient grounds to prevent (or allow) national judges from judicially estimating the damage suffered as a result of that conduct.
The judgment was issued on February 16, 2023 and sheds light on the three questions raised by the Commercial Court No. 3 of Valencia (Judge: Eduardo Pastor Martínez), in relation to a preliminary ruling related to a claim for private damages arising from the ”Truck cartel”.
Directive 2014/104/EU (hereinafter, “Damages Directive”) -transposed into Spanish law by Royal Decree-Law 9/2017 of 26 May 2017- had, among other objectives, those of guaranteeing the right to full compensation for any potential injured party as a result of anticompetitive practice.
Article 3 of the Damages Directive -transposed by Article 72 of the Spanish Law on the Defence of Competition (“LDC”)- regulates the right to full compensation of any injured party affected by an anticompetitive practice, which consists on the faculty of claiming against the alleged cartelist and restore the situation to the time prior to the infringement, without prejudice to the prohibition of overcompensation or punitive damages.
Article 17. 1 of the Directive -transposed by Article 76 of the LDC- imposes the obligation on the Member States to ensure that neither the burden of proof nor the standards of proof necessary for the quantification of the damage should make it practically impossible or excessively difficult to exercise the right to damages. As to materialize the aforementioned right, the Directive empowers national judges to estimate the amount of damages suffered by the claimant, under two conditions: (i) that the estimation be made according with national law, and (ii) that it be limited to those cases in which it is practically impossible or excessively difficult to quantify precisely the damages suffered on the basis of the available evidence.
2. Brief summary of the dispute which resulted in the preliminary ruling
The preliminary ruling arose from the private pursuit of a follow-on action arising from the European Commission (EC) decision of 19 July 2016 (Case AT.39824 - Trucks).
Two particularities should be noted of this procedure:
- Firstly, the aim of the claim was to seek compensation for the damages allegedly suffered in the form of overpricing for the purchase of some trucks during a period affected by an anticompetitive practice, that was later sanctioned by the EC. In this case, the claim was filed against a manufacturer other than the one seller of the purchased truck (both manufacturers had been sanctioned by the EC decision).
- Secondly, during the main proceedings, the defendant offered the applicants access to the data on which its expert report was based, so as to let them verify that no compensable damage was caused from the purchase of the trucks and eradicate the potential information asymmetry between the injured parties and the cartel participants.
- The plaintiff's experts agreed and had access to the data used by the defendants' expert report and submitted a report on the results obtained.
In this context, Valencia Commercial Court No. 3 raised three questions to the CJUE, which are, essentially the following:
- The first question raised relates to the application of Article 394. 2 of the Spanish Procedural Law -which, as noted above, establishes the distribution of legal costs in the event of a claim being partially upheld, so each party bears the costs incurred at its own instance and half of the common costs - could be contrary to the right to full compensation of the injured party for anti-competitive practices under Article 101 of the Treaty on the Functioning of the European Union (TFEU), insofar as that provision of the Spanish law may require that the injured party bears some of the costs of the proceedings.
- The second question deals with the faculty of the national judges to estimate the compensable damage (currently established in Article 76(2) of the LDC), and the potential limitation on those cases in which the defendant has offered to disclose the data used on its expert report (second question), or when the claimant files the claim against a manufacturer other than the one to which the claimant bought the cartelized product (third question). The reasoning underlying these two questions is that both situations entail that the defendant does not enjoy better information, so the asymmetry that allows greater judicial flexibility may be limited.
3. CJEU decision
The CJEU first resolves the question relating to the costs of the proceedings in relation to Article 394.2 of the Spanish law, and then the court resolves jointly the second and third questions, relating to the power of judicial assessment of the damage.
a. The compatibility of Article 394.2 of the LEC with European law
The CJEU’s ruling starts by answering the question related to the legal costs, by clarifying that the right of injured parties to full compensation provided for in Article 3 of the Damages Directive (and Article 72 of the LDC) is not related to the rules governing the imposition of costs in legal proceedings, insofar as the purpose of the system of costs - in each Member State - is not to compensate damages, but to distribute the costs incurred in legal proceedings.
Notwithstanding, the CJEU analyzes whether the regulation of Art. 394.2 LEC may have on impact on the right to full compensation for the damage suffered as a result of anticompetitive practice.
And the conclusion reached is clearly negative. Taking as reference the conclusions of Advocate General Kokott (point 68 of her Opinion), the CJEU considers that “Article 101 TFEU, in conjunction with the principle of effectiveness, must be interpreted as not precluding national legislation which, in certain cases, provides that the costs be divided into two even where the claimant has been successful in part. However, that requires that that legislation can be interpreted in conformity with EU law as meaning that, where the claimant has been partially unsuccessful because it is excessively difficult or practically impossible to quantify the harm, the defendant is to bear all the costs or, depending on the circumstances of the case, may be required to bear at least a reasonable portion of the claimant’s costs”.
Consequently, the CJEU sheds light on the first question by indicating that “sharing of costs in a case where each party succeeds on some and fails on other claims is an expression of procedural fairness”, and, therefore, the aforementioned provision of the Spanish law does not make it practically impossible or excessively difficult to exercise the right to full compensation and, therefore, does not conflict with the provisions of Article 3 of the Damages Directive, deriving from Article 101 of the TFEU.
b. Information asymmetry and the faculty of judicial estimation of the damage
Secondly, the CJEU deals jointly with the second and third questions, as both derive from the application of Article 17 of the Directive.
To do so, the CJEU begins by recalling that – as stated in the judgment of the CJEU of 22 June 2022, C-267/20 – the national measures transposing paragraph 17.1 of the Directive (transposed in article 76.2 of the LDC), relating to the power of the courts to determine damages, are applicable ratione temporis to actions for damages brought after 26 December 2014 (as was the case in the main proceedings).
Following this, the CJEU specifies the scope of application of the judicial estimation of damages and limits it to those situations in which, the plaintiff has proved the existence of damage, but it is considered for the judge to be “practically impossible or excessively difficult to quantify it”. Consequently, according to the CJEU, the situation of information asymmetry that may (or may not) exist in an antitrust proceeding is not, in itself, decisive for the application of the judicial assessment of damages.
Based on this principle, the CJEU sets out the following considerations:
- First, that uncertainty is inherent in any legal proceedings related to actions for damages arising from an antitrust tort. As such, even in those cases where the existence and attribution of liability is determined, it is innate and common to find uncertainty as to the amount of compensation (as a result of the confrontation of arguments and expert reports). However, these "uncertainties" inherent to antitrust litigation do not correspond to the degree of complexity of the estimation of the damage that is required for the application of the judicial estimation of the damage provided for in Article 17.1 of the Directive (and 76.2 of the LDC).
- Moreover, in line with the previous argument, this faculty of judicial estimation is effectively limited to situations in which, once the existence of damage to the plaintiff has been accredited, it is practically impossible or excessively difficult to quantify it. And such a situation may even arise in situations where the parties are on an equal footing in terms of available information.
- Consequently, the CJEU considers that notwithstanding the fact that the disclosure by the defendant of the information on which its expert report is based may contribute to the adversarial debate on both the reality and the amount of the damage, and is therefore to the benefit of the parties (and there may be a resulting reduction of the asymmetry of information between the parties), such access is not a decisive fact, by itself, to enable or preclude the resort to the judicial estimation of the damage based on Article 17. 1 of the Directive, since the decisive factor lies in the excessive difficulty or impossibility of quantifying the damage (which, in the case at hand, had actually been proven to have been suffered), but and not in the degree of information asymmetry.
Yet, the CJEU adds a significant clarification in paragraphs 56 and 57 of the judgment: that, regardless of the above, if the plaintiff decides not to use the resources available under the Directive (Article 17. 1) and national law (article 283 bis of the LEC) provided to compensate for the aforementioned information asymmetry, then if the judge considers that it is precisely the plaintiff's decision (or inaction) that causes the excessive difficulty or impossibility of quantifying the damage potentially suffered by the plaintiff, this must be decisive for the impossibility of resorting to the judicial estimation of the damage. Thus, the CJEU holds that the national court must verify, prior to any estimation of the damage arising from an antitrust misconduct, whether the plaintiff has made use of those mechanisms provided for in the Directive and in Article 283. a) of the Spanish law to correct the asymmetry of information. Consequently, if the practical impossibility of assessing the damage is due to the plaintiff's inactivity, it is not for the national court to replace that party or to remedy its failure to act.
In other words, the CJEU states that the degree of information asymmetry is not, in itself, a determining factor in the possibility for the national court to resort to the estimation of the damage. But it specifies that, in those cases in which the lack of evidentiary effort (or the plaintiff's failure to use the means at his disposal to reduce this information asymmetry) is what causes the excessive difficulty or impossibility of quantifying the damage suffered, it will not be up to the judge to compensate for the plaintiff's inadequacies or lack of action (and therefore, in such cases, the damage should not be judicially estimated).
c. Litigating against another sanctioned entity and the resort to the judicial estimation of the harm
On the basis of these same premises, the CJEU addresses the last preliminary question raised by the Judge.
In particular, the CJEU emphasizes that, under EU law, any claimant bringing a claim for damages based on the existence of damage resulting from an infringement of competition law may, in principle, direct its claim against any of the co-infringers, insofar as an infringement of competition law entails, in principle, the joint and several liability of its authors (without prejudice, obviously, to the particularities of each specific case and, in particular, to the need to analyze what specific conduct each infringement consisted of and whether or not all the infringers participated in such conduct).
Furthermore, the fact that a plaintiff directs its action against another of the infringers (other than the one whose products were acquired) is not an obstacle, according to the ruling, for either the plaintiff or the defendant to be able to resort to the mechanisms provided for in the Directive (article 5, transposed in article 283 bis of the LEC) to request information from the other co-infringers that, where appropriate, may be relevant to the dispute.
Nevertheless, for the exact same reasons as those indicated in the response to the previous query, the CJEU considers that the circumstance which characterized the dispute in which the question was referred - i.e. the fact that the claimant had brought proceedings against an infringer from whom it had not acquired the trucks in respect of which it was claiming - is not, in itself, a decisive factor, of the possibility for the national court to resort (or not) to the power of judicial assessment of the damage (without prejudice, of course, to the influence that such a circumstance may have, where appropriate, in causing a situation of excessive difficulty or impossibility of determining the damage and the consequences that, in the court's opinion, this should have in relation to the possibility of resorting to the judicial estimation of the damage).