After some delay, Slovenia finally adopted the new amendment to the Prevention of Restriction of Competition Act ("Competition Act"), which implements the Directive 2014/104/EU ("Directive") on actions for damages for infringements of the competition law.
While the Directive stated that member states should bring into force national regulations to implement it by December 2016, the amendment was adopted by the National Assembly on the 25th of April, 2017, and it came into effect on the 20th of May, 2017.
Up until now, compensation claims were scarcely regulated by the Competition Act. General rules of the law of obligations and civil procedure applied - apart from specific regulation of the statute of limitations, and some provisions regarding the interaction between the courts and the national competition authorities and the European Commission.
In order for the Directive to be implemented, 16 new articles were added to the Competition Act, and a couple more were amended. Still, the use of general rules of the law of obligations and civil procedure apply, however, there are a lot of new, specific rules which govern both procedural and substantive aspects of compensation claims. The outline of such novelties is presented below.
The disclosure of evidence and handling of confidential information
The new provisions regulate in detail the rights and obligations of the parties, as well as third persons with regard to the disclosure of evidence. With the exception of leniency statements and settlement submissions – the disclosure of which is not permitted, parties may request access to the relevant evidence. A special concern is given to the protection of business secrets and other confidential information, where certain measures may be undertaken in order to ensure protection of such information.
Taking into account the principles of necessity and proportionality, both the injured party and the infringer may request that the evidence is disclosed by the opposing party or third parties, including public authorities (such as the national competition authorities). If the party does not comply with its obligation to disclose the evidence, the court will decide on the legal costs at its discretion. Whereas, if the third party refuses to do so, the court's decision on the disclosure of evidence may be enforced in accordance with the rules governing the execution proceedings.
The effect of the national competition authorities' final decisions
In addition to the court being bound by a final decision of the Slovenian Competition Protection Agency ("Agency"), the Competition Act now also stipulates that in case that the final infringement decision was adopted by a national competition authority of another EU member state, such a final decision generates an assumption that an infringement of competition law has indeed occurred, whereas counter-evidence is admissible.
Joint and several liability of the infringers
Joint and several liability of the infringers, which is provided for by the Directive, is a general rule under the Slovenian law of obligations. The new amendment therefore brings into force only specific provisions regarding (i) infringers who are small or medium-sized companies, and (ii) infringers that received immunity from a payment of a fine.
An infringer, with less than 250 employees and an annual turnover less than 50 million euros or 43 million euros of total assets, is liable only to its own direct and indirect purchasers, if its market share is below 5% and joint and several liability would inflict economic damage on it and cause its assets to lose all their value. Notwithstanding, such an infringer remains jointly and severally liable to other injured parties if they cannot obtain full compensation from the other infringers. Infringers, who compelled other companies to take part in the breach of competition laws or against whom a final court or administrative decision on the breach of competition laws was already issued, also remain jointly and severally liable to all injured parties.
Joint and several liability of the infringer that received an immunity from fines, is limited to the amount of damages caused by this infringer to its own direct and indirect purchasers or suppliers.
Another novelty is that the injured party who concluded the settlement with one of the infringers may claim damages from the rest of the infringers, but only up to the amount reduced for the co-infringer's share of the harm. Notwithstanding, the injured party may claim the reduced amount also from the infringer, with whom it concluded the settlement, if the other infringers are not able to reimburse the injured party and unless it was agreed in the settlement that such claim is not admissible.
The Statute of Limitations
The period of limitation of actions for damages is five years (it was previously three years) from the moment the injured party becomes aware, or could be reasonably expected to become aware, of (i) breach of competition laws, (ii) damages incurred due to breach, and (iii) the infringer, whereas the action cannot be brought before the court after ten years (previously five years) from the moment damages had incurred. Notwithstanding the foregoing, the limitation period does not start to run before the breach of competition laws has ceased.
Quantification of harm
The quantification of damages, often a tough nut to crack due to complex issues which have to be taken into consideration, is now expected to be facilitated by rules brought into force by the amendment. When the court is determining the amount of damages at its discretion in accordance with the general rules of civil procedure, it is now authorised to take into account the profit the infringer gained by the breach of competition laws. Moreover, a legal presumption that cartels cause harm is now in force, shifting the burden to prove otherwise to the infringer. The court can also ask the Agency or the national competition authority of another EU member state to give their opinion on the quantification of damages.
The passing-on of overcharges and indirect purchasers
According to the amendment, the amount of the overcharge presents actual loss and while full compensation should be reached, it should not exceed the said amount. The infringer may invoke a passing-on defence, proving the overcharge was – in whole or in part – transferred to the next level of the supply chain. It has to be noted though, that in case the injured party passed-on the overcharge and it resulted in a decline of sales or purchases, it should be entitled to damages for loss of profit.
If the indirect purchaser brings an action for damages, the claimant bears the burden of proving that an overcharge was passed-on to him. The amendment alleviates the claimant's onerous duty by introducing a legal presumption that the overcharges have indeed been passed-on to the claimant, if the claimant succeeds in proving that (i) the defendant breached competition laws, (ii) passing-on of overcharges to the claimant was a result of that breach, and (iii) the claimant purchased goods or services, that were the object of the breach. This legal presumption is rebuttable if the defendant can prove that the overcharge was not, or at least not in its entirety, passed on to the indirect purchaser.
Consensual dispute resolution
If the parties consent to an alternative dispute resolution procedure, the court proceedings may be suspended for up to two years. Such a provision encourages the parties to reach an out-of-court agreement even though the court proceedings have already started.
What all of this really means?
More claimant-friendly regulation, as well as adjustments of the compensation claims to specifics of competition law, are hoped to increase the number of private antitrust litigation cases throughout the EU member states. The idea of the Directive and the new amendment to the Competition Act is to raise the incentives for private damage claims and thus bring together, and ensure an effective combination of both public and private enforcement - since only the combination of both will ensure the full effectiveness of competition law.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.