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Competition Law Damages Actions – Rules Make Ireland an Attractive Venue for Competition Litigation

DATE: 28/02/2017

This week saw publication of the European Union (Actions for Damages for Infringements of Competition Law) Regulations 2017 (“Regulations”).  The Regulations transpose into Irish law what is known as the EU Antitrust Damages Directive (2014/104 EU) (“Directive”).

The Regulations are stated to be effective (retrospectively) from 27 December 2016, the deadline for compliance with Ireland’s EU law obligation to transpose the Directive. Ireland is one of only ten Member States that have transposed the Directive to date.  The UK has consulted but has not yet implemented any legislation.

The Regulations are intended to simplify and standardise throughout the EU the rules for claiming compensation for damage suffered as a result of an infringement of EU or Irish competition law (eg, a price-fixing cartel that raised prices for customers).

Some interesting aspects of the Regulations include the following:

Removal of exemplary damages from the Competition Act 2002 – The Regulations include a new definition of the “full compensation” to which a claimant is entitled and remove the right to seek exemplary damages.  To our knowledge, exemplary damages were never granted in an Irish competition case.

Inclusion of provision for defendants to rely on ‘pass on’ defence - The Regulations provide that no compensation is available for damage from competition law infringements (eg, over-charging) that was "passed on" to customers.

No disclosure of leniency or settlement papers -  The Regulations provide that a Court cannot order disclosure of submissions to a regulator as part of a whistle blower or settlement application (where liability may have been admitted).

Amendments to Statute of Limitations – The Regulations amend the Statute of Limitations to clarify that the six year limitation period for competition actions does not commence until the competition infringement ceases and is suspended for the duration of any regulatory investigation into the infringement.

Although Irish law has included a specific legal basis for private competition litigation since introduction of the Competition Act 2002, to date such cases have been rare and generally not been pursued to a final decision.  Ireland is not unusual in this respect. Throughout Europe private competition damages awards remain rare, with reports of only 23 final awards having been made in cartel damages cases to date.  However, we can expect this situation to change quickly due to increasing rates of regulatory enforcement, private competition litigation and the implementation of the Directive.

By increasing legal certainty on what a claimant can expect from a private competition action in Ireland, the Regulations may encourage private competition litigation before the specialist Competition division of the Irish High Court.  Post-Brexit, there will be more reasons why Ireland is an attractive venue for private competition litigation – as Ireland will become the only European jurisdiction with a common law legal system that is fully integrated with European Law and ability to offer legal advice and services in English.

Overall, the Regulations act as a reminder to all companies operating in Ireland that there are detailed legal rules to facilitate private competition law damages actions such that one needs to be prepared for the volume of these actions to increase in future.

Matheson has market leading experience in advising on competition litigation, having advised on the only follow-on action, the only action involving an amicus curiae application, and the most high-profile on-going competition proceedings before the High Court. Please contact Helen Kelly with any related query.