Pursuing compensation claims for violations of competition law

The analysis of the opinion of Juliane Kokott, Advocate General of the Court of Justice of the European Union, in a case involving a dispute between a Czech company and Google sheds new light on pursuing claims based on the non-final decision of the European Commission.

The Act on Claims for Compensation for Harm Caused by Infringement of Competition Law, so-called private enforcement, has been in force in Poland for the seventh year.

However, there is still some time to wait for a comprehensive assessment of it, as the decisions of Polish courts in such cases so far still concern cases of a transitional nature (i.e. the Act is only partially applicable to them). Nevertheless, during this time, Directive 2014/104 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, covered by national law, which the above-mentioned Act is an implementation of, has been made significantly more detailed and even de facto supplemented in the case law of the EU courts. At present, taking into account the theses of this case law, there are grounds to assess that it offers a mechanism for actions for damages that is in a real and unambiguous way favorable to the victim of an infringement of competition law. As a result, it can be expected that the practice of implementing the aforementioned law by Polish courts will also move in that direction.

The above line of interpretation of Directive 2014/104 was recently confirmed in the opinion of Advocate General Juliane Kokott in Case C-605/21 Heureka Group a.s., delivered on 21 September 2023. As in any case referred for pre- liminary ruling, it deals with issues arising from a specific case, but nevertheless contains a number of statements of a systemic nature. If the opinion is taken into account by the Court of Justice of the European Union, which is usually the case with this Advocate General’s considerations, the risk of bringing actions for damages against undertakings that infringe competition law will increase significantly.

In the case in which the above-mentioned opinion was issued, the Czech court asked whether a national court considering an action for damages could rely on the findings of the European Commission’s decision establishing that the defendant undertaking had infringed competition law in order to prove the alleged infringement and its duration, even though the decision was not final on the date the action was brought and had still not become final by the date of the reference for a preliminary ruling.

In this case, a Czech undertaking brought an action for damages invoking European Commission’s 2017 decision C(2017) 4444 final Google Search (shop-ping), in which the Commission found that Google (presently Alphabet, Inc.), had infringed Article 102 TFEU. The Commission found that Google abused its dominant position by reducing traffic from its general search results pages to competing comparison shopping services and increasing that traffic to its own comparison shopping service, which may have had, or was likely to have, anticompetitive effects on 13 relevant national specialized comparison shopping markets, as well as on those general search markets. Among those 13 markets, the Czech market was mentioned. Google brought an action against that decision before the General Court of the European Union, and the proceedings initiated by that action are still pending.

The Czech undertaking brought an action for damages in mid-2020, at a time when the fact that Google had filed an appeal against the Commission’s decision was already widely known. The plaintiff demanded compensation from Google for the harm it had suffered in the form of lost profit in the amount of CZK 394,857,000 plus interest (more than PLN 70 million), which it allegedly suffered as a result of Google’s abuse of its dominant position in the Czech Republic. Basing its claims on the Commission’s findings made in the reasons for the aforementioned non-final decision, the plaintiff stated that during the period indicated in that decision, Google placed and displayed its own price comparison service in the best possible position among the results in its general search services, which reduced the number of visits to the sales price comparison site it operated.

As the Advocate General noted, Directive 2014/104 does not answer the question posed by the Czech court, but “merely” obliges national legislators to ensure that an infringement of competition law found by a final decision of a national competition authority or by a review court is deemed to be irrefutably established for the purposes of an action for damages brought before their national courts under Article 101 or 102 TFEU or under national competition law. This is also how Article 30 of the Act cited at the outset has been worded, as it binds the court examining the action for damages by a final decision of the President of the Office of Competition and Consumer Protection declaring a practice to infringe competition, or by a final judgment issued following an appeal against such a decision.

In addition, Directive 2014/104 introduces a mechanism in Article 10 to suspend the running of the limitation period for claims for damages as soon as a national authority or the European

Commission initiates an investigation or antitrust proceeding involving an infringement of competition law that is the basis of a claim to compensate harm. In contrast, the directive is “silent” on the staying of the proceedings for damages themselves in a situation where these proceedings and the investigation conducted by the authority are taking place in parallel.

The Advocate General notes that the fact that the Commission’s decision is not yet final does not prevent the plaintiff and the national court from relying on its findings, including those regarding the existence of the infringement and its duration. The Advocate General points out that a non-final decision in which the Commission finds an infringement of competition law has binding effect until it is annulled. The Advocate General de duces that assessment from the principle of the presumption of legality of acts issued by the EU institutions. Moreover, if a party affected by an infringement of competition law or a national court were able to rely solely on the findings of a final Commission decision establishing such an infringement, the plaintiff would in any case have to wait for the conclusion of the proceedings for judicial review of that decision or would have to prove the fact of the infringement of competition law and its duration entirely on its own. This could make it unduly difficult for the injured parties to exercise their right to compensation under Articles 101 and 102 TFEU – meanwhile, the idea behind private enforcement is to provide an effective path for claiming compensation for all injured parties. A long waiting period for the Commission’s decision to become final would frustrate that objective.

At the same time, the Advocate General points out that the right of the national court to stay the proceedings for damages in a given case until the Commission’s decision becomes final cannot be ruled out. However, taking such a decision requires the national court to consider a number of circumstances against the background of the case. The Advocate General points out that Directive 2014/104 does not prohibit a national court from continuing proceedings where a procedure concerning the same infringement is ongoing before the Commission – indeed, proceedings for the public and private enforcement of EU competition law are complementary and may in principle be carried out simultaneously. This must also apply in a case in which the procedure before the Commission is closed but proceedings for the judicial review of its decision are ongoing before the EU judicature. Indeed, a general obligation to stay the national proceedings would have the problem of encouraging undertakings which the Commission has found to have infringed competition rules to bring an action against the decision and then an appeal against the judgment of the General Court with the sole aim of delaying restorative justice being served.

The Advocate General also sees the risk that an appeal against the Commission’s decision will proceed, in the meantime, based on that decision, the national court will issue a judgment awarding damages, that judgment will become final, and then the Commission’s decision will be validly annulled. The Advocate General points out in this context that the national court, in assessing whether it is necessary or appropriate to stay the proceedings, must take account, first, of the economy of the procedure and of its duty of sincere cooperation with the EU institutions which may, where appropriate, argue in favour of a stay of proceedings.

Second, the court should take into account the claimant’s right to an effective remedy and of the defendant’s right to legal certainty, which may argue in favour of the need to resolve the dispute within a reasonable time. In this regard, it also seems appropriate to take into account the strength of damages obtained within a reasonable period of time, and obtained many years after the infringement of competition law and the damage suffered.

Next, the national court should, in the Advocate General’s opinion, take into account in deciding whether to stay the proceedings its own assessment of the validity of the Commission’s decision reached by the national court, and should consider whether there exists under national law an extraordinary remedy which allows, where appropriate, the decision given in the proceedings relating to compensation for harm to be revised.

It follows from all of the above considerations that, in the view of the Advocate General, even a nonfinal Commission decision finding an infringement has, in principle, binding effect in private enforcement. Thus, the national court may, on the basis of that decision, establish the existence and duration of the infringement alleged to have caused the harm in question, unless, in view of the circumstances of the case, it considers it appropriate to stay the proceedings until the decision becomes final. These conclusions are highly relevant to the effectiveness of the rights granted to injured parties in Directive 2014/104 – it is to be expected that if they are confirmed by the Court of Justice, they will also be reflected in the practice of national courts applying the Act on Claims for Compensation for Harm Caused by Infringement of Competition Law.

Author: Elżbieta Buczkowska, counsel, Baker McKenzie Krzyżowski i Wspólnicy sp.k.

This article comes from magazine:
FOCUS ON Business #15 March-April (2/2024)