On 20 April 2023 the Court of Justice of the European Union (CJEU) issued an interesting judgment about the evidentiary value of the decision of a national competition authority in the context of civil actions (particularly an action for damages and nullity of a contract); and seized the opportunity to substantially confirm the Volvo case-law (C-267/20) about the temporal scope of Directive 2014/104 (hereinafter “Damages Directive”).
Between 1987 and 2009, a Spanish service station operator concluded several exclusive contracts with Repsol, a global energy company, for the supply of fuel. In 2001 Repsol was found in violation of competition law rules by the Spanish Competition Court, because it had fixed, in the context of its contractual relations with certain Spanish service stations, fuel retail prices. Afterwards, in 2009, the Spanish National Competition Commission adopted a decision in which it penalized certain refining companies, including Repsol. Both decisions were upheld by the Spanish Supreme Court respectively in 2010 and in 2015.
In reaction to those decisions, the above-mentioned Spanish service station operator brought an action to declare the nullity of the contracts concluded with Repsol (B), and another one for damages for the harm allegedly caused by such contracts (A). In this context, the Spanish Commercial Court requested the CJEU a preliminary ruling regarding on the one hand, the effects of a national competition authority’s findings on the burden of proof of a subsequent action for damages and for nullity; and on the other hand, the scope of the said nullity.
A-) Action for damages: does the victim need to bring evidence of an infringement already found by a national competition authority?
The question of the effects of a national competition authority’s decision for the purposes of an action for damages is now dealt with in Article 9(1) of the Damages Directive. It is therefore necessary to first determine whether this provision is applicable to the present case (1). If not, what is the probative value of such decisions in civil actions? (2)
1-) Article 9(1)’s irrebuttable presumption: the challenges posed by the Damages Directive’s temporal scope
As the name suggests, it is clear that an action for damages is covered by the material scope of the Damages Directive. So far as concerns the temporal applicability, it must be recalled that it depends on the very nature of each provision. While substantive provisions do not apply retroactively (i.e. they are inapplicable to situations that became definitive before the transposition deadline), mere procedural provisions only apply to actions brought after that deadline. This is provided for under Article 22 of the Damages Directive, which pitfalls have already been addressed in the judgment Volvo and DAF Trucks (for a detail comment, see our article).
In the present case, the question arises as to the applicability of Article 9(1), which sets up an irrebuttable presumption according to which an infringement of competition law found by a national competition authority’s final decision “is deemed to be irrefutably established for the purposes of an action for damages”. In other words, the victim claiming damages for an infringement found by a competition authority does not have to resubmit evidence to the civil court to prove such an infringement. Much more than a mere shift in the burden of proof, Article 9(1) allows to irrefutably establish the existence of the infringement, which is one of the necessary constituent elements of civil liability, and must therefore be classified as a substantive rule.
As such, Article 9(1) cannot apply to situations that became definitive before the expiry of the time limit for transposition of the Directive, i.e. before 27 December 2016. Given that the Spanish competition authorities’ decisions relating to the infringements at issue were definitely upheld by the National Supreme Court in 2010 and in 2015, they became final before the time limit for transposition. Therefore, Article 9(1)’s presumption is not applicable ratione temporis.
2-) The principle of effectiveness: shift in the burden of proof to the benefit of the victim, even when the Damages Directive is inapplicable
Failing that, the ruling must be based on the law pre-Directive, i.e. in the light of Article 101 TFEU as implemented by Article 2 of Regulation No. 1/2003. Pursuant to Article 2 of that Regulation, the burden of proving an infringement of Article 101(1) or 102 TFEU rests on the party alleging the infringement. However, the Regulation remains silent on the effects of national competition authority’s findings in the context of a civil action for damages. In this regard, as highlighted by the Advocate General, the enforcement of claims for damages due to breaches of UE Competition Law “would be rendered excessively difficult if the final decisions of a competition authority were to be accorded no effect […] in civil actions for damages”. Accordingly, in light of the principle of effectiveness, the Court considers that the infringement found in a final decision of a national competition authority is deemed to be established in the context of a civil action, thus shifting the burden of proof.
Unlike the presumption established in Article 9(1) of the Damages Directive, this one is rebuttable and allows evidence to the contrary. Also, the CJEU explains that such a presumption only applies when the nature as well as the personal, temporal and territorial scope of the alleged infringement subject to the civil action coincide with that of the infringement found in the competition authority’s final decision. To that end, it is up the National court to ascertain whether the applicant has shown that its situation falls within the scope of the competition authority’s decision. If that is not the case, the competition authority’s findings are not irrelevant, but only constitute “indications of the existence of the facts to which they relate”.
B-) Action for nullity under Article 101 TFEU and its effects
Whereas the main case-law involves actions for damages, the value of a decision of a national competition authority was very unclear in the context of an action for a declaration of nullity; and this judgment has the merit to address such doubts.
The material scope of the Damages Directive being limited to actions for damages, it necessarily does not extend to other types of actions such as actions for a declaration of nullity, as here. Therefore, the irrebuttable presumption provided for in Article 9(1) of the Damages Directive is not applicable ratione materiae. Nevertheless, the above-mentioned rebuttable presumption resulting from the principle of effectiveness is, according to the CJEU, transferable to actions in nullity brought under Article 101 TFEU.
If the action is successful, does it render the whole contract void, or only the provisions that contravene Article 101 TFEU? The answer is of paramount importance given that the nullity referred to in Article 101(2) TFEU is automatic and absolute, which means that the agreement at issue “has no effect as between the contracting parties and cannot be set up against third parties”. European judges seem to have opted for the second option, the automatic nullity being only applicable to the “contractual provisions which are incompatible with Article 101(1) TFEU”. Concerning the rest of the agreement, the CJEU leaves it up to the national courts to draw the consequences of the declaration of nullity. To guide them, the Court recalls that “the agreement as a whole is void only if th[e] parts of the agreement are not severable from the agreement itself”.
C-) Comment
1-) The distinction between a “stand-alone” and “follow-on” action
Even though it is not mentioned by the Court, the Advocate General Pitruzzella expresses doubts, in his preliminary observations, as to the referring court’s classification of the civil actions at issue. In fact, according to the Spanish court, the claim for a declaration of nullity is so intrinsically related to the compensation for damages that it makes the whole action a “stand-alone”. However, the Advocate General recalls that the distinction between a “stand-alone” and a “follow-on” action is not based on the purpose of the action (nullity or damages) but rather on whether or not there has been a prior finding of the infringement in a decision of a competition authority. As a consequence, a “stand-alone” action is a civil action (in nullity or damages) brought without any prior decision adopted by a competition authority, while a “follow-on” action relies on a finding of an infringement by a competition authority. Such clarifications are of paramount importance since it has repercussions on whether or not a competition authority’s decision must be taken into account, which is at the heart of this case. In addition, the Advocate General highlights that such a distinction between “stand-alone” and “follow-on” actions is only used in practice; therefore, the Damages Directive apply to any type of action for damages in the context of competition infringements.
2-) The infringements covered by Article 9(1)
In the absence of case-law on the interpretation to be given to Article 9(1) of the Damages Directive, one may wonder whether it also requires a full overlap between the asserted (by a competition authority) and alleged (before civil courts) infringements. Although it is not clearly stated in Article 9(1), it would make sense to respond positively. In this regard, the Advocate General mentions in his point 59 that it only applies “where there is coincidence between the infringement found in the decision of the national authority and that which allegedly caused the harm for which compensation is sought in the civil action”. Consequently, it appears that whether or not Article 9(1) is applicable, the evidentiary value (rebuttable or irrebuttable) granted to a decision of a competition authority only covers civil actions relating to the very same infringement found by the said authority, i.e. in the same material, personal, temporal and territorial scope.
3-) Temporal scope of the Damages Directive
Finally, it is interesting to see that, even though they come to the same conclusion, the Advocate General and the CJEU analyze the Damages Directive’s temporal scope from a different perspective, which demonstrates that the Volvo judgment was not crystal clear after all. Whereas the Court takes into account the date on which the national competition authority’s decisions became finale (2010 and 2015), Advocate Pitruzzella reasons from the date of the realization of the constituent elements of the right to compensation. In this regard, he takes into consideration the date on which the contracts at issue came to an end (i.e. 2014, given that the last contract was signed in 2009 for 5 years). Of course in the present case the outcome remains the same (inapplicability ratione temporis), but the Court’s solution is in essence much more favorable to the applicant because the Damages Directive could apply to competition law infringements that occurred before 17 December 2016, but which gave rise to a decision from a competition authority that became final only after this date.
The Court’s position is hard to understand when comparing the Repsol and the Volvo judgments, whose facts are similar. Both cases involved a presumption established by the Damages Directive: on the one hand, in the Repsol case, Article 9(1) sets up an irrebuttable presumption regarding the existence of an infringement of competition law found by a national competition authority’s final decision; on the other hand, in the Volvo case, Article 17(2) sets up a rebuttable presumption regarding the existence of a damage in case of cartel infringements. Both provisions were qualified as substantive rules, as they affect the necessary constituent elements of civil liability (even though it was less obvious for Article 17(2), at issue in the Volvo case, since it was only a rebuttable presumption). Moreover, in both cases, the infringements have been the subject of decisions of competition authorities (national ones for Repsol and the European Commission for Volvo and DAF Trucks). However, in Volvo, European judges considered that the Directive was inapplicable because the infringements (from 1997 to 2011) which caused the damage ceased before 17 December 2016. In Repsol, the Advocate General follows this case-law, while the CJEU emphasizes the fact that the competition authority’s decision became final before this date. We believe that the difference lies in the wording of the provisions at issue: Article 9(1) refers to “an infringement […] found by a final decision of a national competition authority”, whereas Article 17(2) only mentions “cartel infringement”. A case-by-case analysis of each provision of the Directive will therefore be necessary.
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Marco Amorese
Jeanne Deniau