CJEU rules on cost bearing and judicial damages estimations in Antitrust Damages Actions

On 16 February 2023, the Court of Justice of the European Union (the “CJEU”) delivered a ruling in the case of Tráficos Manuel Ferrer SL, D. Ignacio v Daimler AG (Case C-312/21) wherein it held that:

  1. a national cost rule under which, where a claim is upheld in part, each party bears their costs and half of the common costs is not contrary to EU law; and
  2. while a judicial estimation of damages does not require proof of an asymmetry of information, it requires proof that the existence of harm has been established and that it is practically impossible or excessively difficult to quantify it with precision, which involves taking into account all the factors that contributed to the finding of the harm, particularly the unsuccessful nature of steps such as the request to disclose evidence.

Case Background

On 19 July 2016, the Commission adopted a decision by which it found that fifteen truck manufacturers, including Daimler AG (“Daimler” or the “Defendant”), Renault Trucks SAS, and Iveco SpA, had taken part in a cartel on truck pricing in the European Economic Area. On 11 October 2019, Tráficos Manuel Ferrer SL and D. Ignacio (the “Applicants”) brought an action for damages before the Commercial Court No 3 of Valencia, Spain (the “Referring Court”) against Daimler. Such action was based on the claim that the Applicants had suffered harm consisting in an overcharge for the vehicles they had purchased, some of which were manufactured by the Defendant, and which overcharge was owing to the Defendant’s infringement of Article 101 of the Treaty on the Functioning of the European Union (the “TFEU”). In support of their claim, the Applicants submitted an expert report which established an overcharge of 16.35%. This expert report was challenged by the Defendant by way of its own expert report. Following a preliminary hearing, the Defendant gave the Applicants access to the data used in the drawing up of the Defendant’s expert report, and using this data, the Applicants submitted a technical report on the results obtained.

Due to doubts as to the compatibility of Spanish procedural law with EU law, the Referring Court referred the following three questions to the CJEU for a preliminary ruling:

  1. The first question related to whether the application of Spanish procedural law, which establishes the distribution of legal costs in a way that, if a claim is partially upheld, each party would bear the costs incurred at its own instance and half of the common costs, could be contrary to the right to full compensation of the injured party for anti-competitive practices under Article 101 TFEU;
  2. The second question dealt with the faculty of the national court to estimate the compensable damage and the potential limitation in those cases where the claimant had access to the data on which the defendant’s expert report was based; and
  3. The third question dealt with the faculty of the national court to estimate the compensable damage and the potential limitation in those cases where the claim is directed to only one of the infringers, which infringer only marketed part of the goods in relation to which the overcharge is alleged.

The CJEU’s Considerations and Ruling

Through its ruling in this case, the CJEU held that, insofar as damages claims covered by Directive 2014/104/EU (the “Damages Directive”) are concerned, EU law does not preclude a national civil procedure rule that requires each party to bear half the common costs if the claim is partially upheld, provided that there was no wrongful conduct. The CJEU maintained that such a provision does not make it practically impossible of excessively difficult to exercise the right to full compensation for the harm suffered pursuant to the anticompetitive behaviour. Therefore, such a provision is in line with the principle of effectiveness.

Advocate General Juliane Kokott had opined that the Spanish rule is contrary to EU law and referred to the CJEU’s decision in Caixabank (Joined Cases C-224/19 and C-259/19) as a basis for this. In that judgement, the CJEU had declared the same rule incompatible with Directive 93/13/EEC (the “Unfair Contract Terms Directive”) since it creates a significant obstacle that is likely to deter consumers from filing a claim. The Advocate General considered cartel damages cases to be suffering from a structural imbalance comparable to that in consumer contracts. However, the CJEU departed from this line of thinking. In fact, it held that unlike the Unfair Contract Terms Directive, which sets limits on an unequal balance of power between a weak party (a consumer) and a strong party (a professional), the Damages Directive covers actions involving the non-contractual liability of an undertaking and a balance of power between the parties which may have been corrected as a result of the effect of the national measures transposing that Directive.

Therefore, due to the EU legislature’s intervention, the party that was initially at a disadvantage and who suffered the harm was given the means to correct the balance of power between themselves and the party which infringes competition law. It follows, therefore, that the way each of those parties conducts themselves, particularly whether or not the party who suffers the harm makes use of the tools at their disposal, determines how that power balance will change. Consequently, if the party who suffered the harm is partially unsuccessful, it is reasonable for that party to bear their own costs, at least partially, as well as some of the common costs, provided that the origin of those costs can be attributed to them, for example because they made excessive claims or because of the manner in which they handled the litigation.

Regarding the second question referred to it, the CJEU held that the fact that the infringer made the data it used to contest the applicant’s expert report available to the latter is not relevant for the purposes of determining whether it is possible for national courts to estimate damages. The CJEU noted that damage estimation is predicated on the premise that the existence of the harm has been established and that it is practically impossible or excessively difficult to accurately quantify it. This difficulty in the estimation of damages may be due to “particularly significant difficulties” in the interpretation of documents disclosed as regards the proportion of the passing on of the overcharge resulting from the cartel on prices of products acquired by the claimant from one of the parties to the cartel. Consequently, it was considered that information asymmetry was not decisive in this case since it is possible for difficulties to arise during the specific quantification of the harm even when the parties are on a level playing field in terms of the information available to them.

Regarding the third question referred to it, the CJEU held that the fact that the request was merely addressed to one of the addresses of a decision finding the infringement at issue, is also not relevant for determining whether it is possible for national courts to estimate the harm. This is because an infringement of competition law involves the joint and several liability of all the undertakings that committed the infringement. Furthermore, the CJEU stated that the fact that an applicant directs their action against one of the infringers, other than the one whose products were acquired, does not prevent either of the parties from resorting to the mechanisms provided for in the Damages Directive, such as the possibility of requesting information relevant to the dispute from the other co-infringers.

Concluding Remarks

Overall, there are a number of additional noteworthy findings in the judgement that are relevant beyond the case at hand.

The first of such findings relates to the temporal application of the Damages Directive provisions. With regard to the right to full compensation and joint and several liability, the CJEU seems to go beyond the specific rules contained in Article 22 of the Damages Directive relating to the temporal application of substantive and procedural provisions. The CJEU held that Article 3 of the Damages Directive regarding the right to full compensation and Article 11 of the Damages Directive regarding joint and several liability reaffirm, recognise, and define the pre-existing case law regarding the principle of effectiveness arising directly from Article 101(1) TFEU. Therefore, the rules and national measures transposing them apply “with immediate effect to all actions for damages falling within the scope of that directive”.

Moreover, the judgement perfectly illustrates how the requirements of the Damages Directive and the principles of effectiveness and full compensation of harm relate to one another. The right to full compensation follows directly from primary law and the effective enforcement of Articles 101 and 102 TFEU. The application of the principle of effectiveness further defines the principle of full compensation: the full compensation of damages and, therefore, the enforcement of competition law must be effectively ensured.

Finally, very similarly to its considerations in PACCAR (Case C‑163/21), Sumal (Case C‑882/19) and Skanska (Case C‑724/17), the CJEU here emphasises the dual roles of public and private enforcement in a complete system of enforcement of EU competition rules. In doing this, the CJEU also highlights the function of private enforcement, in particular, in compensating victims, deterring anti-competitive behaviour, and therefore preventing competition law breaches and effectively enforcing such law as an end in itself.

This article was first published on The Malta Independent on 14/06/2023.