The UK Implements The EU Antitrust Damages Directive

The Damages Directive1 seeks to promote private enforcement of EU competition law before national courts across the European Union (the "EU"). The UK Regulations2 implementing the Directive3 were laid before Parliament on 20 December 2016 but will not come into force until after they have received formal Parliamentary approval (the "Implementation Date"). The Regulations will apply to claims brought on or after the Implementation Date, although the extent of their application differs depending on when the infringements to which the claims relate took place. The Regulations will make significant changes to rules governing antitrust damages actions:

The Regulations make changes to the limitation periods for competition damages actions brought after the Implementation Date. Limitation periods will in these cases be suspended during investigations by competition authorities and during any consensual dispute resolution ("CDR") process. The Regulations introduce a presumption that cartel infringements cause loss or damage. In future, if there is a finding of infringement, it will be for the defendant to rebut the presumption of loss in any damages action. The Regulations change the rules on passing on. Indirect purchasers will benefit from a presumption that any overcharge suffered by direct purchasers has been passed on to them. Meanwhile, in order to raise passing on as a defence, an infringer will bear the burden of proving that any overcharge has been passed on by a claimant. The Regulations will, in most cases, prevent co-defendants from bringing contribution claims against a defendant that has settled with the claimant. Certain categories of information will become immune from disclosure, including leniency statements and settlement submissions. Pre-existing information and contemporaneous evidence will remain subject to disclosure, even if they were produced to a competition authority in the context of leniency or settlement discussions. We discuss the changes in more detail in this Alert Memorandum.

1. BACKGROUND

   1) Antitrust Damages Directive

   The right of any natural or legal person to claim compensation for loss suffered as a result of an infringement of EU antitrust rules is well-established.4 The European Commission, however, was concerned that the underdevelopment of national rules governing damages actions in many Member States prevented victims from effectively exercising their rights to claim compensation.

   The Directive aims to make it easier for victims of anti-competitive behaviour to seek compensation from infringing parties before national courts in all Member States. In particular, the Directive seeks to harmonise rules governing limitation periods, the passing on of overcharges, the principle of joint and several liability, disclosure, and the quantification of harm.

   2) UK approach to implementation

   The UK Government consulted on the approach to implementing the Directive in early 2016. It concluded that, because the UK already had well-established rules governing rules for antitrust damages actions, an overall "lighter touch" approach to implementation would be more appropriate than copying out the Directive's provisions in their entirety. Under this approach, existing provisions that already meet (or exceed) the Directive's requirements will be left in place, and changes will be made only where necessary.

   The Directive applies only to cases involving a breach of EU competition law, including where both EU and national competition law are infringed. Member States are not required to implement the provisions to claims that relate solely to infringements of national competition law. The UK Government considered, however, that having different rules depending on whether a damages action is based on EU or UK competition law would lead to uncertainty for businesses and consumers, not least because most damages actions are based on both EU and UK competition law. Therefore, although not required by the Directive, the UK Government has decided to apply the provisions of the Directive to all competition damages actions.

2. IMPLEMENTATION IN THE UK

   1) Temporal application of the Regulations

   The Regulations implementing the Directive will come into force on the Implementation Date. The Regulations distinguish between "substantive" and "procedural" provisions.5 "Substantive" provisions of the Regulations apply only to the extent that a claim relates to loss suffered on or after the Implementation Date as...