Legal Update: Finnish Working Group Proposes Implementation of EU Damages Directive
Finnish Working Group Proposes Implementation of EU Damages Directive
The EU Directive on Antitrust Damages Actions entered into force on 26 December 2014. Member States are required to implement the Directive in their legal systems by 27 December 2016.
A working group set up by the Ministry of Employment and the Economy has been preparing the Directive’s implementation into Finnish legislation. The working group has on 16 June 2015 proposed a new Finnish Act on Antitrust Damages Actions. The proposal will next be circulated for comments, after which the preparations of the Act will continue. The final Act is expected to come into effect during 2016.
Below we assess briefly the main proposals of the working group. As the majority of the working group’s proposals are based directly on the EU Directive, our focus is on aspects where the Directive gives latitude for national variations.
Material and temporal scope
The proposed Act would be applicable to damage resulting from an infringement of both EU and Finnish competition law. The Act would apply to claims proceedings in both general courts and in arbitration.
According to the working group’s proposal, the Act would apply to actions for damages which are brought after the Act’s effective date. The Directive also requires that Member States ensure that the national measures adopted in order to comply with the substantive provisions of the Directive do not apply retroactively. According to the working group, such substantive provisions include at least the provisions concerning the liability for damages, the persons entitled to compensation and the extent of the compensation. The provisions related to the temporal scope of the proposed Act will be elaborated upon as the preparations of the Act continue.
Compensable damage and presumption of harm
According to the proposed Act all natural or legal persons, including indirect purchasers, who have suffered harm caused by an infringement of competition law have a right to full compensation. In accordance with the prohibition against enrichment, the compensation shall not exceed full compensation.
Full compensation shall cover actual loss and loss of profit, as well as payment of interest from the time the harm occurred until compensation is paid. According to the working group’s proposal, interest shall be paid on the damages as stipulated in Section 3(2) of the Finnish Interest Act from the day when the damage was caused until the day when the conditions for overdue interest as set out in Section 7 of the Interest Act have been fulfilled. The interest rate prescribed in Section 3(2) refers to the reference rate of the ECB, whereas the rate prescribed in Section 7 is seven percentage points higher. Currently, the said rates are thus 0.5 % and 7.5 %, respectively.
According to the proposal, there is a rebuttable presumption that cartel infringements cause harm. However, there is no such presumption concerning other infringements of competition law.
The Damages Directive does not include specific provisions concerning so-called economic succession. However, the Finnish working group proposes that if the business activity in which competition law has been infringed has been transferred, also the acquiring party will be liable for damages if it knew or it should have known about the infringement when the business activity was acquired. As it is required that the acquiring party knew or should have known about the infringement, the provision would not be uniform with the principle of economic succession applied in public enforcement proceedings.
The effect of infringement decisions
A Finnish court shall base its judgement on the fact that competition law has been infringed if there is a final infringement decision of the Finnish Competition and Consumer Authority (FCCA), the Finnish Market Court or the Finnish Supreme Administrative Court. The effect of the determination of the infringement would cover only the nature of the infringement and its material, personal, temporal and territorial scope.
If the infringement of competition law is found in a final decision which is made in another Member State, a Finnish court shall take the infringement decision into consideration as part of the evidence that an infringement of competition law has occurred.
Joint and several liability
Undertakings that have infringed competition law through joint behaviour are in general jointly and severally liable for the harm caused by the infringement. The exceptions concerning leniency recipients and certain small or medium-sized enterprises correspond to those in the EU Damages Directive.
According to the Directive and the working group’s proposal, compensation can be claimed by anyone who suffered it, irrespective of whether they are direct or indirect purchasers. In order to avoid overcompensation, appropriate rules shall be enacted to ensure that compensation for actual loss at any level of the supply chain does not exceed the harm suffered at that level. The working group also proposes rules concerning the distribution of the burden of proof relating to the passing on of the overcharge.
Presentation of evidence
According to the working group’s proposal, presentation of evidence will be assessed under the general rules in Chapter 17 of the Finnish Code of Judicial Procedure, in particular Sections 38 and 40. A court cannot in the damages proceedings take into account as evidence information about the contents of corporate statements from leniency procedures. Furthermore, before the FCCA has closed its proceedings, a court cannot take into account certain other information as evidence. The court shall limit the disclosure of evidence to what is proportionate taking into consideration the legitimate interests of all parties concerned.
The working group proposes that the right to compensation shall expire if the action for damages has not been initiated within five years from the point in time when the claimant knew, or should have known of the infringement of competition law, of the harm and of the party responsible for the harm. In any case, the limitation period needs as a rule to be interrupted before ten years has passed from the point in time when the infringement of competition law ended. If the European Commission or the FCCA has started an investigation during the limitation period, the right to compensation shall not expire sooner than one year after the final decision in the infringement proceedings or when the proceedings have otherwise been closed.
Consensual dispute resolution
The working group’s proposals concerning consensual dispute resolution closely follow the provisions of the Damages Directive.