Private Enforcement of Competition Law

SYMPOSIUM

Private Enforcement of Competition Law

Edited by: Pablo Solano Diaz and Lena Hornkohl

Table of Contents

1. Introduction

Pablo Solano Diaz and Lena Hornkohl

2. What Role for Private Enforcement in EU Competition Law? A Religion in Quest of Founder

Csongor István Nagy

3. The Protean Nature of the Effectiveness Principle in the Private Enforcement of EU Competition Law

Clio Zois

4. The Balancing of Powers in Private Antitrust Enforcement – when David met Goliath?

Mariya Serafimova

5. There must be Twenty-Seven Ways to get your Damages: Heterogeneity and Uncertainty in Antitrust Private Enforcement

Barry Rodger, Miguel Sousa Ferro and Francisco Marcos

6. Private Enforcement: a Prime Case for Forum Shopping

Thomas Thiede

7. Spanish Antitrust Litigation: Ecstasy and Failure

Eduardo Pastor

8. The Critical Role of (Potential) Cost Claims by Intervening Parties in Private Enforcement Proceedings. An Austrian Example

Florian Neumayr and Ana Toncoglaz

9. The Passing-On Defence: Don’t let the Money stay in the Pockets of the Cartelists

Antonio Robles

10. The Parental Liability in Private Enforcement of EU Competition Law

Marco Pasqua

11. Private Enforcement of the DMA. A Challenge for all Stakeholders involved

Miranda Cole and David Fila

12. Private Enforcement of the Foreign Subsidies Regulation

Volker Weiss and Jan Kupcik

Introduction

Pablo Solano Diaz and Lena Hornkohl

The raise of claims for damages resulting from competition law infringements to a full-fledged private pillar that completes the European Union (EU) antitrust enforcement edifice is probably the biggest revolution in the field in the past ten years. Seen in the bigger picture of EU law enforcement through private law, competition law is often given as the prime example and most developed field. The possibility of private enforcement of EU competition law has always been there, embedded in the very effet utile of Articles 101 and 102 TFEU, and its case-law consecration can be traced back to the turn of the millennium, where the landmark Courage v Crehan (C-453/99) judgement and then Manfredi (C-295/04) were pronounced. These represented (not so small) steps towards certain “communitarisation” of the criteria governing claims for competition damages beyond mere effectiveness and equivalence, albeit still subject to national procedural autonomy. However, a real harmonisation attempt was not undertaken until the Commission set the legislative wheel in motion in 2013 which resulted in the delivery of the Damages Directive (Directive 2014/104/EU). Ambitious for some, watered down for others, in any case much-discussed, the truth is that it was as successful in prompting litigation as it was not in bringing about clarity and unity (fair enough being a directive – one could think).

Ten years later it seems high time we took stock of solved and pending (procedural, substantive and practical) aspects and reflected on the fitness of EU private enforcement to deal with new challenges facing competition law. In lack of sufficient application cases, the Commission issued a rather vacuous report on the Damages Directive in 2020. Although the Commission came to an overall positive conclusion, due to the considerable backlog of most Member States transpositions and the transitioning period of the Damages Directive itself, the report now does not contain the envisaged in-depth analysis of the Directive. An amended Directive as foreseen in Article 20(3) to accompany the report was out of the question too. In short: more application cases and accordingly CJEU jurisprudence is needed. In the meantime, this symposium tries to give an overall picture on the state of play and future prospects of private enforcement in the EU. It endeavours, firstly, to provide a lay of the land by presenting the foundational constituents of the EU damages regime, concentrating on its very rational, its constitutional or institutional fit in the EU legal order and the procedural equilibria that it is meant to strike. Secondly, the seemingly consistent underpinnings of the harmonised private enforcement system and the array of national differences necessarily slipping through the cracks of procedural autonomy are contrasted as leading to uncertainty and forum shopping, on the one hand, and judicial “communitarisation” of cornerstone safeguards of the regime, on the other hand. These issues, in particular, passing-on, parental liability and cost allocation, are discussed in the third place. Fourthly, the broader private enforcement picture is sketched beyond traditional antitrust to ponder over its role in recently opened legislative paths – the Digital Markets Act (Regulation (EU) 2022/1925) and the Foreign Subsidies Regulation (Regulation (EU) 2022/2560).

Csongor István Nagy sets the scene by ascertaining the raison d’être of the EU private enforcement regime as the interpretative key to its function and boundaries. Although the Damages Directive disavows deterrence and clings on to compensation as final cause, contrary to the transatlantic system, the author claims that both outcomes are intertwined. This is based on as systematic (mechanical even) stance on the general economy of the two-sided public and private enforcement system put forward by Advocate General Wahl’s resolved opinion in Skanska (C-

724/17). The enforcement policy objective of deterring breaches through punitive redress, which does not sit so well with continental legal orders forbidding unjust enrichment as it does with common law across the pond, is made legally palatable through procedural enhancement of the classic principle of effectiveness – most notably seen in the passing on presumption. Yet, one might wonder whether the consistent phrase used by the CJEU – last in the infamous Tráficos Manuel Ferrer (C-312/21) case – that the private sphere plays a role “in the financial penalisation of anticompetitive conduct” might prompt a reevaluation of punitive redress and a true continental shift in continental tort law concepts.

It would seem that enhanced or qualified effectiveness beyond the regular counterpart of equivalence in paddocking procedural autonomy is indeed key to the compensatory (or ultimately deterrent) rationale behind the EU private enforcement system. The jurisprudential fluctuations of the concept of full effectiveness, already coined in Courage v Crehan as the rights-based foundation for claims for competition law damages and showing many faces since then, is seen by Clio Zois as legal Proteus who may prophesise the real essence of damage claims if its true nature is ever grasped. In particular, she distinguishes three phases or shapes in case law and the Damages Directive itself: firstly, full effectiveness is identified with the existence of a right to compensation resulting from the breach of Article 101 (and 102) of the TFEU; secondly, it seems to shift back to a more classic function as a limit to procedural autonomy (along with equivalence); and, thirdly, it rises to the effective exercise of the right to compensation.

Placing full effectiveness, in its shape of effective right to compensation, at the heart of the EU competition damage regime system provides a useful yardstick to evaluate how fair the balance struck by harmonisation is. Mariya Serafimova discusses whether the role of private enforcement as a supplement to public enforcement in aspiring to consumer welfare could explain the departure from general civil law rules regarding, e.g., burden of proof or costs. This departure should help a metaphorical David overcome the imbalance of powers that makes the defendant a Goliath protected by information asymmetries, financial resources, and economic as well as factual complexity. Against this background, she reflects on how the actual application of devices such as the presumption of harm, the judicial discretion in estimating damages and the allocation of costs in recent cases such as Tráficos Manuel Ferrer may level the playing field in practice.

However, the task of delineating the contours of the harmonised standards introduced by positive and negative harmonisation (Damages Directive and case law) faces the additional challenge of the margin left to procedural autonomy. In the view of Barry Rodgers, Miguel Sousa Ferro, and Francisco Marcos, this allows the different solutions given in different Member States to, especially, four material issues to result in as many enforcement systems as countries there are. Such issues are the economic viability of private enforcement actions, which creates national rifts as regards the existence or intensity of collective actions; limitation periods, regarding which the CJEU has difficulties in criticising national limitation periods – as it did in Cogeco (C-637/17), so it tends to limit itself to clarifying the temporal scope of the Damages Directive – in Volvo (C-30/20) and upcoming Heureka (C-605/21); access to evidence, where national pre-trial disclosure rules vary widely if these exist at all; and international jurisdiction, where the abundant and lax CJEU rulings have stirred up forum shopping.

The latter issue is subject to closer analysis by Thomas Thiede, who presents forum shopping as the corollary of national differences and, hence, a defining factor of the harmonised private enforcement system with strategic implications in practice. He guides us through the rules on jurisdiction and applicable law in regulations Brussels I bis (Regulation (EU) No 1215/2012) and Rome II (Regulation (EC) No 864/2007) as interpreted by the CJEU. He focuses on several matters that are particularly prone to causing that phenomenon, including the single economic unit doctrine, the place of occurrence of harm as forum for tort, connected claims, and the fragmentation dangers in the choice of law applicable to damages given the massive national differences.

National differences are then used to illustrate how the harmonised standards fall into place in reality and the practical challenges facing judges and parties. Eduardo Pastor takes a famous episode from Don Quixote as an allegory of the evolution of Spanish judiciary’s dealings with damages claims. He argues that the particularities of the judicial design in this Member State, involving certain inherent lack of specialisation, entailed some enthusiasm as commercial courts took the lead (reflected in the many preliminary referrals sent over to the CJEU) to be curbed at a later stage by insufficient expertise of lawyers and judges, dispersion of cases, and the absence of a class action system and a proper institutional infrastructure for safeguarding consumer interests. With this Spain-focused assessment, he nevertheless paints a bigger picture for overall more effective private enforcement in the EU.

Another paradigmatic national example is provided by Florian Neumayr and Ana Toncoglaz, who focus on the development of cost claims in Austria. The constitutional debate in this Member State about intervening parties’ lack of liability for costs if the main claim is rejected brings the importance of costs once again to the forefront. This seemingly practical question is, however, capable of transcending the procedural plane and becomes a question of full effectiveness due to the high costs involved in damage litigation, and the multiplicity of defendants and intervening parties – which can be decisive for the outcome and incentivised or deterred by the assumed cost risk to be pondered over against the intervening party’s lack of independent influence on proceedings.

Antonio Robles opens the thematic block by addressing the one topic that caused rivers of ink to flow even before the Damages Directive: passing-on. He dissects this multi-faceted phenomenon and concludes that the choice made in the presumption-defence binomial is the only possible legal (rather than economical) option, which entails that it must operate through a legal device – the burden of proof. It is also an autonomous EU law concept derived from the compensatory essence of EU damage claims and from the role of private actions in the overall enforcement system, rather than from general effectiveness, which entails a narrower margin from procedural autonomy not to breach full effectiveness.

The other major presumption-based catalyst on which the Damages Directive rests is discussed by Marco Pasqua: parental liability. He navigates through the main cases to recall that a strong presumption of decisive influence was the traditional way of overcoming the fact that the EU autonomous construct of ‘single economic unity’ as an atom of competition law is ill at ease with general civil law’s personal liability concept. Then, he shows that this approach faced further difficulties in private enforcement when projected in the distorting mirror of procedural autonomy and how a qualified concept of full effectiveness is once again used to keep national quirks on a leash. At the end of the day, the solution is not quite different from public enforcement: an atomic concept of single economic unit, which, however, entails greater consequences in private enforcement, especially in terms of international jurisdiction and forum shopping. Against this analysis, one might wonder if the single economic unity doctrine can spill over to adjacent fields, e.g., data protection law.

Finally, the private enforcement of new regulation expanding the universe of competition law is discussed in two pieces. Miranda Cole and David Fila emphasise the role to be played by national Courts in enforcing the Digital Markets Act, which includes a similar device to Article 16(1) of Regulation (EC) No 1/2003, whereby only adopted decisions by the Commission would prevail. Additionally, harmonised procedural rules in the Damages Directive and the role of the Commission and national competition authorities as amicus curiae would be applicable, as anticipated by the German example. Lastly, Volker Weiss and Jan Kupcik explore the legal basis, standing and potential remedies for private enforcement of the Foreign Subsidies Regulation, based on general EU law principles and traditional competition and state aid devices, in the absence of specific guidance.

The contributors to this Symposium have provided invaluable pieces to help complete the puzzle of EU private enforcement as it stands now. We trust this will allow the reader to put the multiple threads of CJEU case law and national experiences from this past decade in order and get a sense of how the non-Euclidean geometry of the EU damage claims will unfold in the coming years.

What Role for Private Enforcement in EU Competition Law? A Religion in Quest of Founder

Csongor István Nagy (*)

The movement for EU competition law’s private enforcement emerged about two decades ago. Although invalidity is specifically provided for in Article 101(2), actions for damages had remained, for the most part, a mere theoretical possibility. In the CJEU’s jurisprudence, the discussion arose in the context of English tort law, in Courage v Crehan, (1) which had to be reconciled with the continental thinking of fault-based liability limited by unjust enrichment.

(2) This ushered a judicial quest for a workable solution amalgamating the different national approaches. In parallel to these developments in the case-law, the European Commission’s Green Paper on Damages Actions for Breach of the EC Antitrust Rules, followed by the White Paper of the same title, opened a new era. Although, perversely, this movement has produced much more scholarly pieces than court judgments, it gradually turned private enforcement from a theoretical possibility into a practical reality.

Interestingly, however, private enforcement has ducked the central question of its existence. What is its ultimate purpose? Is it merely meant to make compensation a reality or is it destined to deter from violating competition rules? Is it to compensate and reinforce public enforcement, is it to compensate and supplement public enforcement or is it to punish and, to some extent, replace public enforcement? Although this may appear only a theoretical question, the answer has very important implications. It determines the use and usefulness of comparisons (to US antitrust), the selection of benchmarks for the evaluation, the limits of regulatory playing-field and, finally, the prism of legal interpretation. In US antitrust law, private enforcement serves a public purpose and, hence, comparisons are of a limited value, if EU private enforcement is considered to serve a predominantly compensatory function. If private enforcement’s purpose is conceived as supplementing or even partially replacing public enforcement, the number of actions for damages may appear to be disappointingly low, but if conceived as mere compensation and, as a side-effect, reinforcement of public enforcement, it might be regarded as less disappointing.

The difficult theoretical question is exacerbated by the fact that compensation and deterrence are inseparable and interlinked: compensatory damages deter (though less effectively than super-compensatory damages do) and super-compensatory damages compensate (though much more lavishly than compensatory damages do). Still, this does not detract from the importance of the question: which one is the main purpose, and which one is the side-effect?

EU legislation and the CJEU’s case-law gives mixed signals when it comes to the teleology of private enforcement. The Commission’s Recommendation on Collective Redress, in Recitals 1 and 10, defines collective actions as a means to “facilitate access to justice in relation to violations of rights under Union law” and to reinforce the effectiveness

* Csongor István Nagy is professor of law at and the head of the Department of Private International Law at the University of Szeged and research professor at the Center for Social Sciences of the Eötvös Loránd Research Network. He is recurrent visiting professor at the Central European University (Budapest/New York/Vienna) and the Sapientia University of Transylvania (Romania)

This op-ed is based on the author’s following publication: Csongor István Nagy, What Role for Private Enforcement in EU Competition Law? A Religion in Quest of Founder, in The Cambridge Handbook of Competition Law Sanctions 218-229 (Cambridge University Press, 2022), available at https://ssrn.com/ abstract=4154371 or http://dx.doi.org/10.2139/ssrn.4154371

of EU law. The Recommendation is based on the premise that collective actions are needed because they enhance both the effectiveness of the law (through stopping and preventing unlawful practices) and the chance to obtain a real legal remedy (compensation). Nonetheless, while the Recommendation lists access to justice and effectiveness of the law as aims equally important to compensation, in Recital 15 and paragraph 31, it also makes clear that the purview of these is strictly limited by what is permitted by the compensatory function.

The EU Private Enforcement Directive (3) also features the above multiplicity of aims. Recitals 3 and 13 identifies the full effectiveness of EU competition rules as the Directive’s aim but at the same time limits the extent of the deterrent and victim-friendly rules by ruling out overcompensation and unjust enrichment. The above mindset finds reflection in the detailed rules. While the Directive contains a list of victim-friendly rules in terms of presumptions and reversed burden of proof, these do not question the basic civil law tenet that the injured person may be compensated only for the loss he suffered and cannot become richer as a result of the compensation.

Contrary, however, to the above legislative signals, the CJEU’s ruling in  Skanska (4) signals the prevalence of the public policy function (deterrence). In this approach, private enforcement increases institutional capacity as the decentralized application does and private actors (and courts) are providing free assistance for public enforcement as NCAs do. In  Skanska, AG Wahl considered private and public enforcement to be part of the same unitary enforcement system and private enforcement’s function to be predominantly deterrence, to which the compensatory function is subordinate (paragraph 50). This policy consideration shaped his proposed interpretation of EU law. Although the CJEU did not expressly take up this notion, it endorsed the idea that public and private enforcement make up a unitary system. This conceptual kinship between public and private enforcement may suggest that deterrence may be one of the primary roles, if not the primary role, of private enforcement and is legally construed based on an extended concept of effectiveness. This notion was taken up by the Private Enforcement Directive (in Recital 6).

It is easy to analogize this stance with US antitrust law’s reliance on the “private attorney general.” Although, in the EU, private enforcement does not and cannot have the kind of weight it has in the US, the explicit articulation of its public policy rationale, which took root as early as Courage, (5) is a major development. It is questionable, however, what this view about the teleology of private enforcement may mean in practice. The use of private enforcement for the advancement of public policy purposes creates a challenge for civil law.

Though this statement could call for a reconsideration of the prevailing paradigm of compensation and the introduction of super-compensatory damages, such as punitive or treble damages, in my view these statements do not question the traditional civil law foundations and the principle that the compensation is not meant to enrich the victim but to duly compensate him. Instead, it simply confirms that the main reason why civil liability is so important for EU law is that it also has a deterrent effect. The idea to use and, to the extent possible, maximize the side-effects of private enforcement on public enforcement is a recurring element of the CJEU’s case-law. (6)

Victim-friendly rules may extend until the point where they are tolerable by civil law’s compensatory logic. This does not imply that EU competition law’s private enforcement rules cannot be more victim-friendly than general tort law. It only means that private enforcement may make use of the grey zone between compensatory and super-compensatory damages but cannot transgress this. Legal presumptions concerning damages, the reversal of the burden of proof as to the passing-on defense, to mention a couple of them, do not question of civil law’s basic tenet that compensation must be limited to the loss suffered. They go beyond general tort law and facilitate actions for damages but conceptually still comply with the principle of full compensation.

Article 3 of the EU Private Enforcement Directive pronounces that victims shall be entitled to full compensation, extending to the actual loss and lost profit (and interests); however, it makes it explicit that “[f]ull compensation under this Directive shall not lead to overcompensation, whether by means of punitive, multiple or other types of

damages.” Article 17 alleviates the burden of quantifying the harm suffered. The treatment of passing-on defense and the claim of indirect purchasers features a similar compromise between the public policy function and traditional compensatory thinking: the EU Private Enforcement Directive stretches the victim-friendly rules until the point where they, though more generous than traditional tort law, can still be conceived as compensatory (and not punitive).

The passing-on defense accrues from the compensatory logic of damages: the injured person cannot be compensated for a harm he did not suffer; if the harm was partially or fully passed on, it was not or not fully suffered by the injured person but by the indirect purchasers, who bought the products from the direct purchaser. At the same time, the passing-on defense may be an effective defensive tactic, because of the problems of proof it raises. In US antitrust law, these policy considerations warranted the discarding of the passing-on defense (7) and, as a consequence, the denial of indirect purchasers’ standing. (8) The principle that passing-on may not be used either defensively against a direct purchaser, or offensively against an antitrust violator is justified by the effectiveness of enforcement. The passing-on defense may highly encumber the enforcement of the claims of direct purchasers, while it is highly unlikely that indirect purchasers could effectively prove the loss they suffered and enforce their claims. Hence, the policy consideration of enhancing the effectiveness of private enforcement suppressed the private law considerations emerging from the notion of compensation.

While this policy-oriented construction could not be reconciled with the European legal mindset, policy considerations did shape the rules on passing on. The EU Private Enforcement Directive refused to step out of the shadow of the compensatory logic and endorsed the passing-on defense and the standing of indirect purchasers (Articles 12(1) & 14), but – with a view to enhancing the effectiveness of private enforcement – placed the burden of proof on the wrongdoer (Article 13).

All in all, it seems that while private enforcement has multiple purposes in EU competition law, it features an idiosyncratic compromise between policy-oriented deterrence and the traditional notions of civil law (full compensation, prohibition of unjust enrichment). While serving a public policy purpose and making use of the grey zone between compensatory and super-compensatory damages, EU “private competition law” does not go beyond that and remains within the confines of “compensation.” (9) The fact that it is the deterrent side effects that make private enforcement relevant for EU competition law and subject to special legislative attention does not question its compensation-oriented DNA.

[1] C-453/99 Courage v Crehan, ECLI:EU:C:2001:465.

[2] C-295/04 to C-298/04 Manfredi, ECLI:EU:C:2006:461.

[3] Directive 2014/104/EU 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, OJ [2014] L 349/1.

[4] C-724/17 Skanska and others, ECLI:EU:C:2019:204.

[5] Case C-453/99 Courage and Crehan [2001] ECR I-6297.

[6] See C-882/19 Sumal, ECLI:EU:C:2021:800, para 36, C-163/21 PACCAR, ECLI:EU:C:2022:863, para 56, C-312/21 Tráficos, ECLI:EU:C:2023:99, para 42.

[7] Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968)

[8] Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977)

[9] For instance, the preservation of the ex turpi causa principle in Courage v Crehan, though limited by the possibility to prove that the innocent part was dragged into the anticompetitive arrangement, impairs the effectiveness but is a limitation justified by civil law principles.

The Protean Nature

of the Effectiveness Principle in the Private Enforcement of EU Competition Law

Clio Zois *

“He will take the shape of every creature that moves on earth, and of water and of portentous fire.”

Homer, Odyssey, 4. 455ff

According to Homer’s legend, on his journey home from Troy and while stranded in Egypt, the war hero Menelaus encounters the sea-god Proteus, an “old man of the sea” who can foretell the future, but will change his shape to avoid doing so. Proteus’ ability to take all kinds of shapes, from a bearded lion to a monstrous boar, to running water and even to a towering leafy tree, made him the icon of versatility and adaptability in ancient Greek mythology.

Much like Proteus, the principle of effectiveness has been versatile in shaping the case-law on the private enforcement of EU competition law. It seems to have been used predominantly in three ways, during the various phases of the coming-into-being and development of the private enforcement case-law.

Effectiveness in three phases and shapes

In a  first phase, the effectiveness principle was used by the Court of Justice to justify the existence of the right of every individual to claim damages before its national court for an infringement of EU competition law. Thus, in the seminal  Courage  case (C-453/99, par. 26), the Court famously ruled that “the full effectiveness of Article [101 TFEU] […] would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition.” Hence, in this first phase, the Court looked at the “effectiveness of Article 101 TFEU”, i.e. the effectiveness of the competition law Treaty provisions themselves (including both Articles 101 and 102 TFEU), to lay the foundation for the private enforcement of EU competition law.

In a second phase, once it was clear that there was such a thing as a right to privately enforce EU competition law, the principle of effectiveness shifted its shape towards national (procedural) rules. Thus, in the Manfredi case (C-295/04, par. 62), the Court of Justice ruled that “[…]  it is for the domestic legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from [Union] law, provided that such rules […] do not render practically impossible or excessively difficult the exercise of rights conferred by [Union] law.” By virtue of this case-law, the principle of effectiveness turned, together with its twin brother the equivalence principle, into a benchmark criterion to assess the EU law compliance of national procedural rules governing the right to claim damages. For instance, in Manfredi (C-295/04, par. 78), the Court ruled that national limitation periods that start running on the day an anticompetitive agreement is adopted could breach the effectiveness principle, particularly if such limitation periods are also short and not capable of being suspended.

* Clio Zois is a Member of the Competition Team of the Commission’s Legal Service. The views expressed are strictly personal and can under no circumstance be attributed to the European Commission.

This benchmarking function of the effectiveness principle for national (procedural) rules continues, to this day, to form the basis of many preliminary references in the field of private enforcement. For instance, in the recent Tráficos Manuel Ferrer  case (C-312/21, paras. 48 and 65), the Court of Justice applied the effectiveness benchmarking formula (“render-practically-impossible-or-excessively-difficult”) to certain Spanish procedural rules regarding the allocation of costs and the subsidiary judiciary estimation of harm. The Court held, first, that rules providing for the splitting of procedural costs between the claimant and the defendant where the claimant is (only) successful in part do not, in principle, breach the effectiveness principle. Second, the Court held that the facts that (i) a damages claim partly relates to goods which the claimant acquired from other cartel participants than the defendant; and (ii) the defendant made available to the claimant the data relied on to draw up its expert report on the existence of harm are not, in themselves, relevant for assessing whether national courts can engage in the subsidiary estimation of harm. Rather, according to the Court, the effectiveness principle as also enshrined in Article 17(1) of the Damages Directive requires a consideration of all circumstances at hand (including assessing disclosure requests made by a claimant pursuant to Article 5 of the Damages Directive).

In a  third phase, and most recently, the principle of effectiveness shifted to the right to private enforcement itself (which it previously helped to establish). For instance, in  PACCAR  (C-163/21, par. 44), the Court of Justice referred, amongst others, to the “effective exercise of the right to compensation” to justify its conclusion that damages claimants can also request the disclosure of certain documents that are created  ex novo. Hence, it seems that in this third phase, the effectiveness principle, rather than merely relating to Articles 101 and 102 TFEU (phase 1) or acting as a benchmark to national rules (phase 2), has shifted from the original Treaty provisions to the right (to compensation) that ensures the effectiveness of these Treaty provisions. In other words, in this third phase, the effectiveness principle seems to have shifted to ensuring the enforcement of the right to compensation in a more abstract manner, thereby possibly changing in function and giving that right itself a more autonomous existence.

Three (or even more?) shapes of effectiveness in the Damages Directive

The  Damages Directive itself incorporates all three of the aforementioned shapes of the effectiveness principle (rights-creating in phase one, benchmarking in phase two and rights-enforcing in phase three). First, it incorporates the rights-creating nature of the effectiveness principle in recital (3), which mentions that: “The full effectiveness of Articles 101 and 102 TFEU […] requires that anyone […] can claim compensation before national courts for the harm caused to them by an infringement of those provisions.” Second, in recital (11) and Article 4, the Damages Directive refers to the benchmarking nature of the effectiveness principle, by mentioning that national procedural rules “should not be formulated or applied in a way that makes it excessively difficult or practically impossible” to claim damages for an infringement of EU competition law. Finally, in recitals (4) and (14), the Damages Directive incorporates the rights-enforcing nature of the effectiveness principle, by referring to the “effective exercise of the right to compensation guaranteed by the TFEU”.

Moreover, an interesting incorporation of the effectiveness principle can be found in Article 17(1) of the Damages Directive, which also formed the other subject of the Tráficos Manuel Ferrer case as mentioned above. Article 17(1) of the Damages Directive not only explicitly repeats, in its first sentence, the effectiveness principle (whereas the effectiveness principle is also mentioned as an overarching principle in Article 4 of the Damages Directive already), but also incorporates, in the second sentence, the effectiveness principle as a pre-condition for national courts to engage in the subsidiary judiciary estimation of harm. Thus, Article 17(1), second sentence, of the Damages Directive provides that: “Member States shall ensure that the national courts are empowered […] to estimate the amount of harm if it is established that a claimant suffered harm but it is practically impossible or excessively difficult precisely to quantify the harm suffered  (underlining added)”. By incorporating the effectiveness principle as a pre-condition, Article 17(1) of the Damages Directive might thus even give the effectiveness principle yet another shape.

How Protean is the effectiveness principle?

What to make of this versatility of the effectiveness principle in the private enforcement case-law and legislation? On the one hand, one could argue that the Protean nature of the effectiveness principle is overrated, especially if one were to see the three aforementioned shapes of the effectiveness principle as emanating from one and the same source, namely the need to safeguard the effectiveness of Articles 101 and 102 TFEU, which underlie the private enforcement of competition law. On the other hand, one could contend that, while ultimately leading back to the same source, just as Proteus’ shapes were all in essence various transformations of the same “old man of the sea”, the various shapes of the effectiveness principle are in fact distinct, like Proteus’ shapes of a lion and a boar, due to the fact that these shapes have different historical and practical functions, depending on their application in a rights-creating, benchmarking, or rights-enforcing manner.

According to Homer’s legend, Proteus was vital for getting our stranded war hero Menelaus home from the Trojan war. With the help of Proteus’ daughter Eidothea, Menelaus managed to contain the “old man of the sea” despite him assuming all sorts of shapes. Having been thus trapped by Menelaus, Proteus was forced to use his prophetic abilities and to reveal how Menelaus and his crew could make their journey home. While the various shapes assumed by the principle of effectiveness in relation to the private enforcement of competition law might be further recounted and prophesied in future epics, one thing is at this time already certain: like Proteus for Menelaus, the principle of effectiveness has been vital for the establishment and development of the case-law on the private enforcement of competition law.

The Balancing of Powers in Private Antitrust Enforcement –

when David met Goliath?

Mariya Serafimova *

Introductory remarks: consumers and competition law

Competition law may arguably not be the same as consumer protection law. Yet, the concept of the “well-being of consumers”, including both intermediary and final consumers, lies at the core of competition law. In the wording of the CJEU, it must be considered as “the ultimate objective warranting the intervention of competition law” (see CJEU, Servizio Elettrico Nazionale, C-377/20, para. 46). Remarkably, the same vocabulary has already been used in the past by the Chicago School of antitrust, notably in R.H. Bork’s infamous work “The Antitrust Paradox: A Policy at War with Itself”. He wrote in 1978: “Antitrust is about the effects of business behaviour on consumers. An understanding of the relationship of that behaviour to consumer well-being can be gained only through basic economic theory. […] Consumer welfare, as the term is used in antitrust, has no sumptuary or ethical component, but permits consumers to define by their expression of wants in the marketplace what things they regard as wealth.” In Bork’s work, consumer welfare is characterised by allocative and productive efficiencies, in other words antitrust enforcement should primarily focus on promoting consumer welfare through efficiency and economic analysis.

While the Chicago School has been considered to be flawed in its initial form due to its too narrow approach (mainly limited to price considerations), the consumer welfare standard is still accepted today, in a somewhat nuanced form. The discussion has now shifted towards delineating the exact contours of consumer welfare, in particular the legal tests, standards of proof and economic models used to find an infringement to competition. It is not surprising that also the Treaty on the Functioning of the EU (TFEU) recognises the importance of consumers in antitrust –Article 102 TFEU explicitly refers to abusive conduct “limiting production, markets or technical development to the prejudice of consumers”, whereas Article 101(3) TFEU integrates the condition of “allowing consumers a fair share of the resulting benefit” within the assessment of the exemption to a restriction of competition.

That said, even though the “consumers” have always been at the heart of competition law, private enforcement of competition law and the right to compensation of individuals for their harm suffered from an infringement of EU competition law has only been developed as a separate branch of antitrust enforcement in Europe at a later stage, notably in the case law of the CJEU (see Courage and Crehan, C-453/99 and Manfredi, joined cases C-295/04 to C-298/04). It is now recognised that the traditional public enforcement of competition law through competition authorities “was not sufficient to ensure full compliance with Articles 101 and 102 TFEU and that it was important to facilitate the possibility, for the private sphere, of helping to achieve that objective” (see CJEU, PACCAR, C-163/21, para. 55). For that reason, especially since the adoption of the Directive 2014/104 providing for minimum harmonisation standards for actions for damages (the Damages Directive), private enforcement has a higher importance than ever. It is entrusted with the prevention of anticompetitive conduct, just like public enforcement, because it not only compensates the direct harm suffered, but it can also provide a remedy for “the indirect harm done to the structure and operation of the market, which was not able to reach full economic efficacy, in particular as regards benefits to the consumers concerned” (see CJEU, PACCAR, C-163/21, para. 56).

* Mariya Serafimova is a legal assistant to Advocate General Juliane Kokott at the Court of Justice of the European Union. The article reflects solely the opinion of the author.

Determining the powers in private actions for damages

Also similar to public enforcement, the balancing of powers in private enforcement between the parties to the proceedings is governed in the first place by the general rules on the burden of proof. Put simply, the party or authority that alleges an infringement has the burden to prove it, and likewise, the defendant carries the burden of proof for an exemption to its favour (see Art. 2 Reg. 1/2003).

While this division of the burden of proof corresponds to the general understanding in civil law proceedings – the one who makes a claim has to defend it, an issue arises when there is an imbalance in the positions between the parties. In competition law, the imbalance of powers stems mainly from the asymmetry of information and the complexity of the factual and economic background to an infringement. The asymmetry of information results from the fact that competition law infringements are often clandestine in nature and remain hidden for a long time from the competitors and customers of the infringers. In general, the infringers have knowledge of what they have done and what evidence may be used to demonstrate the participation in anticompetitive conduct, whereas the victim is either unaware of the conduct, the harm or may not know where to find the right evidence in support of its claim for compensation. The EU legislator has also noted this problem (see, in particular, recital 14 of the Damages Directive), as the evidence necessary to prove a claim for damages is often held exclusively by the opposing party or even by third parties.

An additional factor may stem from a financial imbalance. This can be the case when the infringing party is a big company with a strong position on a given market that has extensive resources to defend its position, whereas the harmed party is an SME or an individual with limited resources to invest in the enforcement of its claim. Also, the claim may be of a rather small amount due to a limited purchases from the infringer.

This financial imbalance can be aggravated additionally by high costs related to the enforcement of the right to compensation, in particular costly expert reports to quantify the damages, unfavourable cost bearing rules in the procedural laws and difficulties to find third party funding. In Spain for instance, there is a cost bearing rule that claimants, despite being partially successful with their claim, may have to bear their own costs and part of the common costs if these costs originated in the excessive claims made or how the proceedings were conducted.

All of these factors contributing to the imbalance of powers can have a deterring effect on the pursuit of the right of compensation.

In that regard, one can briefly recollect the biblical story of David and Goliath. In that story, David, a young shepherd boy defeats, against all odds, a giant warrior named Goliath. The point of the tale is that even the seemingly insurmountable obstacles can still be overcome with the right tools and strategy.

With the obstacles for claimants in mind, the Damages Directive has provided certain tools which are capable of remedying the information asymmetry between the parties. In particular, the directive has provided the injured party with the power to ask national courts to require the defendant or a third party to disclose relevant evidence in their possession (Article 5). Second, it has also granted the power to national courts, where it is practically impossible or excessively difficult to quantify the harm, to estimate it (Article 17(1)). Third, it has introduced a presumption of harm arising from a cartel (Article 17(2)).

The provision of these tools as a three-level protection of claimants has been supported by the recent case law of the CJEU (see C-312/21, Tráficos Manuel Ferrer, para. 44). Most importantly, these measures are meant to “interact, since the need to undertake a judicial estimation of the harm may depend, in particular, on the result obtained by the claimant following a request for the disclosure of evidence pursuant to the first subparagraph of Article 5(1) of Directive 2014/104” (see CJEU, C-312/21, Tráficos Manuel Ferrer, para. 56). While this has been explicitly stated for the power of judicial estimation of the harm under Article 17(1) of the directive, it is not entirely clear whether this

interdependence applies mutatis mutandis also for the other levels of protection, in particular, for the presumption of harm. The Damages Directive does not seem to provide an indication for such interdependence, at least not in its wording.

The open question is – are all these measures sufficient to provide for a comparatively small, harmed customer (a David) with the right tools to meet an infringer with a strong market position (a Goliath)? After all, the equality of arms is a recognised principle of EU law.

The new balancing of powers in the Tráficos Manuel Ferrer case

The judgment in the Tráficos Manuel Ferrer (case C-312/21) of the CJEU provides some insights in respect of the first two measures, i.e. the disclosure procedure and the power of courts to estimate the harm under the Damages Directive. It also touches on the above-mentioned cost-bearing rule in Spain.

In a nutshell, the case concerns the actions for damages by two small Spanish purchasers of trucks against participants in the trucks cartel. In 2016, the European Commission adopted a decision in the trucks cartel which found that 15 truck manufacturers, including the defendant in the main proceedings Daimler, had participated in a cartel concerning collusive arrangements on pricing and gross price increases for medium and heavy trucks in the EEA (case  AT.39824  – Trucks). One of the claimants had purchased only one truck produced by the defendant, while the other had purchased eleven trucks, some of which were produced by Daimler but also some by two other cartel participants. They claimed that their damage suffered from the infringement consisted in an overcharge on the vehicles purchased and submitted an expert report which showed a specific average overcharge for the vehicles purchased on the market affected by the cartel. The parties in the proceedings discussed the expert report and agreed that the defendant would grant the plaintiff access to the data it used via a data room (see on data rooms also  P. Hitchings, Transparencia, salas de datos y replicación, 2021). Following this access, the complainants submitted another report. The main proceedings dealt in particular with the quantification of the amount of damage suffered. In its judgment, the CJEU makes an important clarification on the allocation of procedural costs. It considers that “if a claimant is unsuccessful in part, it is reasonable for him or her to bear his or her own costs, or at least part of them, as well as part of the common costs, provided that the origin of those costs is to be attributable to him or her, for example due to the fact that the claimant made excessive claims or due to the manner in which he or she conducted the litigation” (para. 47). The judgment nuances the view expressed by AG Kokott in her Opinion, which considers that the prerequisite for the attributability of the common costs depends on the determination of the origin of those costs, i.e. if they are attributable to the “sphere of responsibility” of the claimant. This could be the case where the partially unsuccessful outcome is due to the fact that the claimant made excessive claims or due to the manner in which he or she conducted the litigation (see Opinion of AG Kokott, para. 68). However, following the logic of the Opinion, where no such responsibility of the claimant can be established, bearing of the common costs for a partially successful claim would not be reasonable. By contrast, the Court does not seem to follow strictly the criterion of the sphere of responsibility.

Instead, the CJEU seems to consider that there is no proper imbalance of powers any more in private enforcement (rather, there is an “evolution of that balance of power”, see para. 46). Not even the asymmetry of information can convince the Court otherwise, which finds instead that there is a duty of the national court, before proceeding to estimate the harm, to determine whether the claimant has made use of the request for the disclosure of evidence. The vocabulary used reflects the new understanding of the distribution of powers between the parties of the private antitrust action following the Damages Directive: “If the practical impossibility of assessing the harm is the result of inaction on the part of the claimant, it is not for the national court to take the place of the latter or to remedy its shortcomings” (see para. 57). This shift of powers seems even more evident when the CJEU concludes that national courts must take into consideration all the parameters leading to finding an impossibility or excessive difficulty

to quantify the harm, in particular, the unsuccessful nature of steps such as the request to disclose evidence laid down in Article 5 of that directive.

Outlook: The difficult balancing exercise in practice

While the judgment of the CJEU clarifies certain aspects, it is still doubtful whether this evolution of the balance of power is always so clear-cut in practice. Even in the Tráficos Manuel Ferrer case, when one looks closely at the parties, it can be argued that there is some degree of imbalance, at least in terms of the cost factor – a small purchaser with a limited capacity to buy trucks and to support its compensation right vs. an international manufacturer of trucks with considerable resources to defend itself. Alone the costs of the expert report could in some cases exceed the amount of the damage. However, it seems that the cost factor is not considered as an issue related to the balancing of powers in the CJEU’s ruling, also not in conjunction with the potential cost risk from the national cost bearing rules when making an excessive claim. Yet the risk of making an excessive claim is inherent to private antitrust litigation. Claims are often filed in a context of uncertainty regarding many aspects related to the damage.

Besides, the judgment leaves some leeway for further interpretation, as taking into account of “all the parameters” could include the principle of proportionality. Proportionality, as a general principle of EU law, is a criterion for the lawfulness of any act of the institutions of the Union, including decisions taken by the Commission in its capacity of competition authority. It is also reflected in the Damages Directive itself and it could be argued that in certain cases, the strict exhaustion of the request for disclosure incurring high costs may be disproportionate to the damages claimed and the capabilities of the private claimant. In such a case, judges may proceed to estimate the harm without requesting the claimant to have unsuccessfully requested the disclose evidence.

It seems that courts in the Member States have been applying a flexible approach. For instance, the Spanish Supreme Court has recently handed down several  key judgments on private enforcement of antitrust (see for more details  B. Bornemann and J. Suderow, 29 June 2023). It found that starting from a gross price higher than what would have resulted from undistorted competition absent the infringement, the final prices paid by truck buyers are higher. Regarding the quantification of the damage, the court considered that the claimants had done their best to substantiate a 5% overcharge, even though their expert report was not relied upon. Eventually, the court made use of its discretionary powers to determine the harm.

Overall, much will depend in future on the exercise of the claimants’ due diligence and the willingness of courts to make use of their discretion when estimating the harm. Similar to a due diligence for claimants that has been discussed in the context of monitoring the publications of press releases on decisions finding infringements of competition law (see Opinion of AG Rantos, Volvo and DAF Trucks, C-267/20, para. 122), one could argue that there is also a duty of claimants to conduct the litigation in a reasonable manner and to undertake the necessary steps to quantify their damage. The decisive “sword” of claimants may eventually be the review of proportionality of the possible measures by the courts, taking into account all circumstances of the case in question. Also the presumption of harm provided for in Article 17(3) of the Damages Directive may be a helpful tool when balancing the risk sphere of claimants carrying the cost and time risk for claiming compensation and the sphere of the defendants. In the end, “consumers” may be well-advised to avoid the natural risk and loss aversion (see, e.g., R. H. Thaler, 1988, “Anomalies: The Winner’s Curse.” Journal of Economic Perspectives, 2 (1): 191-202) and step into the shoes of a victorious “David”.

There must be Twenty-Seven Ways to get your Damages: Heterogeneity and Uncertainty in Antitrust Private Enforcement

Barry Rodger, Miguel Sousa Ferro and Francisco Marcos *

The Damages Directive was meant to turn a rare type of litigation into common practice and to create a level playing field for antitrust damages claims throughout the EU. Injured persons would be entitled to effective judicial redress and full compensation in every Member State, under roughly the same conditions. Let us take stock of what has happened in these 6,5 years, and where we are now.

Practice has shown that some of new rules introduced by the Directive can work (especially thanks to the CJEU’s interventions), but that they are not enough to achieve the Directive’s goals. The proof is in the pudding. We’re only seeing antitrust private enforcement cases in certain countries, and only in certain cases. Most antitrust infringements do not give rise to private damages’ claims. Understanding when and where antitrust private enforcement has become a reality, and whether Competition Law is being applied homogenously, is key to understanding what must still be improved. The following four issues stand out as the most significant:

(1) Economic viability

The main obstacle private enforcement is facing is its economic viability, or lack thereof. As a rule, we are only seeing three categories of cases:

• individual B2B cases with very large damages per claimant;

• collective cases where each person suffered damages of at least 3.000 EUR (via opt-in mechanisms, joinder or assignment, or run by same lawyers or with same funder, sharing common costs); and

• opt-out consumer redress cases (even with very small damages per consumer).

For type (iii), only the Netherlands, Portugal, Bulgaria, and Slovenia so far allow private initiative opt-out representative actions, and only in the first two are there already such cases. In all other Member States, we continue to have no consumer antitrust redress, because (except in the very rare type (ii) cases) they are just not economically feasible.

Most antitrust infringements are B2B and there may be some degree of passing-on. If courts take this passing-on into account – as they should –, the consequence is systematic underenforcement, with infringing companies getting to keep their unlawful profits (given the absence of consumer cases).

The fact that types (i) and (ii) are not happening in every Member State, even though injured persons from every Member State have been joining collective actions (mostly) in the Netherlands, shows that decisive obstacles remain which are specific to some jurisdictions. Possible explanations are: an absence or limited number of (relevant) NCA decisions; mistrust of judicial system to handle this type of case; expected excessive duration of cases; and lack of specialist lawyers and economic experts willing to work for claimants (particularly in small Member States).

* Barry Rodger, Miguel Sousa Ferro & Francisco Marcos are the editors, of the Research Handbook on Private Enforcement of Competition Law in the EU, Edward Elgar: 2023

The decisive influence of economic factors makes the Court’s ruling in Tráficos Manuel Ferrer even more disappointing. The  “right to full compensation … does not concern the rules on the allocation of costs” (1). Sure, but that’s an artful dodge. The issue is whether rules on costs – and on burden of proof – can make it impossible or excessively difficult to be compensated and get access to effective judicial redress. Sooner or later, the Court will need to confront this issue. And maybe it can start in the pending Bulgarian referral in C-438/22 Armeets

It is understandable that the CJEU and many national courts are rejecting the possibility of awarding damages if no economic report has been produced to quantify them. But this cannot be an absolute rule. First, because then the presumptions that cartels cause harm and that it is passed on will never be applied. Second, because – as the Court has noted in relation to the limitation period (2) – you need to consider all elements of applicable national law, the (legal, economic and factual) complexity present in damages claims for competition law infringements and the objectives of its implementation via private enforcement.

Imagine a consumer or SME suffered 1.000 EUR in damage, that running the case (in its Member State) would cost 100 euros in filing fees and 15.000 in legal fees (assuming an exceedingly optimistic 100 hours at a rate of 150 EUR/h). Now imagine that, even if it is fully successful, it can only recoup 200 EUR in legal fees. With such rules on costs, this person does not have access to justice. The national rules, including the absence of an effective collective redress mechanisms, make it impossible for this person to be compensated for the damage it suffered as a result of an infringement of Article 101/102 TFEU. Now add to that having to pay a specialist economist report (complex ones can cost hundreds of thousands EUR), with little chance that the national rules will be interpreted as allowing recoupment of that cost, and the refusal of access to justice extends to much higher potential awards of damages.

Let’s not forget to add the costs of translating the claim and all evidence (easily in the tens of thousands EUR) to serve the claim on a Defendant from a Member State with a different official language. Here too, there may be no prospect, or at least some uncertainty, that such costs can be recovered even if successful. This concern is tied to the discussion currently before the Court in  Transsaqui  (C-632/22). If you can’t serve the claim in your country, in your language, a solution must be found that does not make it economically impossible to sue companies because the costs of translating the claim and evidence vastly exceed the damages recoverable.

All this leads to EU antitrust law being enforceable only when very high damages claims are involved. Or to being at least partly dependent on the rules on costs in each Member State. European legal orders tend to have a formal approach to access to justice. It is time we are realistic and transparent, and recognize that the legal system has to provide workable solutions for small cases, which are just as worthy of justice as litigation involving larger claims.

Another reflection of this discussion is pending before the Court in a recent German referral on assignment. If individual cases are not viable because of the rules on costs, effectiveness might require some form of bundled litigation to be allowed. Given all the features of a given legal system, it may be impossible to exercise the right to compensation (for medium level damages) if assignment is not allowed. Although this issue is for a national court to decide in each specific case, help of the CJEU Law may be required to recognize that, for low levels of damages per person, it may be impossible to exercise the right to compensation in the absence of an effective collective redress system or some public authority-led redress mechanism.

(2) Limitation periods

The rules on limitation periods varied widely between Member States. The  Cogeco, C-637/17, experience (with the CJEU ruling that Portuguese law infringed EU Law and the Portuguese courts subsequently stating the CJEU interpretation had been erroneous), showed that telling national courts to follow the principle of effectiveness is not a sufficient solution. National courts would always be reluctant to find that their general rules on limitation period were not good enough (if that were the case for antitrust, why not for other areas of the law?).

Luckily, the clarification of the  ratione temporis  applicability of the Directive in  Volvo & DAF Trucks,  C-267/20, effectively meant that most cases are not yet time barred. But this is only true because: (i) the deadline only starts to run when a continuous or repeated infringement ceases (just as in public enforcement); (ii) the injured person must know or reasonably be expected to know the behaviour, who did it, that it was illegal, and that it caused harm to it; and (iii) the new limitation periods introduced by the Directive apply to cases that were not time barred when transposition took place.

The fact that the Grand Chamber is ruling on Heureka (C-605/21) is, hopefully, a good sign. This judgment is likely to prove to be a make-or-break point for limitation periods in private damages claims. If the previous case-law is reaffirmed, the effectiveness of the right to damages will not be jeopardized. The continuous infringement issue is much more important, in practice, than the question of whether the requisites of knowledge by the injured person are satisfied. The first is an objective criterion, while the latter are subject to interpretations by national courts (not always sensitive to the complexity of EU Competition Law).

Arguably, the Court has not yet paid enough attention to the last piece of essential information an injured person needs. In the  Trucks cartel, the Court seemingly assumed knowledge of harm caused based on knowledge of the infringement (publication of  res judicata decision). This is clearly not the case when – as in  Trucks – the harm and passing-on are the focus of intense debate and require economic studies to determine if they exist. How does a purchaser of a truck in Spain know, from reading the decision, that the cartel caused a surcharge and that at least some was passed on to it? Many economists’ reports have been produced arguing that it didn’t and wasn’t.

Paradoxically, the CJEU seems to be applying a double standard to burden of proof and limitation periods. It can’t exclude a presumption and require economic studies to prove there was harm, while at the same time saying injured persons should presume there is harm as soon as a decision is published.

Finally, the Court also seemingly forgot that  Volvo & DAF Trucks means that the rule that limitation periods only start to run 1 year after  res judicata  also applies to infringements not previously time-barred. In that case and in Deutsche Bank, the rights were not time barred, even without the additional extension of 1 year after res judicata, so there was no need to address that issue.

(3) Access to evidence

The information gap between those harmed by cartels and other anticompetitive conducts and the infringing undertakings is paramount. The information asymmetry not only hinders the victims learning they have suffered harm, but also hampers proving and quantifying it.

The CJEU explained in  Tráficos Manuel Ferrer that disclosure of evidence may enable potential claimants to overcome such obstacles. Earlier on the Court had clarified that the new rules on access to evidence are procedural and must be applied immediately, including to pending cases (C-163/21 PACCAR and C-57/21 Regiojet).

In Regiojet, the CJEU underlined how private damages claims are complementary to public enforcement, clarifying the conditions in which disclosure of evidence in the file of an NCA is possible, given the complex scenario in which Regiojet requested disclosure of evidence before Czech courts.

More importantly perhaps, earlier in PACCAR, the Court held that disclosure of evidence in accordance with article 5 of the Directive includes the possibility – and perhaps need – to order the production of ex novo documents. This could be a game changer.

All this certainly helps. But the interpretations and practical applications of this will vary widely. Many Member States do not clearly allow for a pre-filing discovery mechanism, without which stand-alone cases are impossible,

and often understanding if one suffered harm because of the infringement is also impossible. In the absence of specialist courts, it will take a long time to change the prevailing judicial culture in some Member States of one’s right to access evidence (which and how). The principle of effectiveness and the CJEU will have important roles to play.

(4) Private International Law

Jurisdictional disputes are a time-consuming hassle for claimants and often a decisive barrier to access to justice. Objections to jurisdiction is the very first plea by defendants to any damages claim in which there is transnational element.  The CJEU has ruled a great many times on jurisdictional issues (3), and more cases are pending (4). Together with the liability of subsidiaries affirmed in Sumal (5), the clarifications that an injured person can sue in the place of its residence (where damage occurred), and that jurisdictional clauses are invalid if the antitrust infringement could not be foreseen when entering the contract, significantly increased the range of jurisdictions competent to hear cases, removing important economic and linguistic barriers for litigation. The Court has even stepped in to resolve legal uncertainty internally within States, assigning jurisdiction to a specific court within the Member State (C-30/20 Volvo).

As was already the case long before the Damages Directive was adopted, the Netherlands is being used as a forum of choice to litigate very large antitrust claims (6). Indeed that is reflected by the wave of pending referrals from Dutch Courts on jurisdiction. An important contributing factor, which deserves more attention than it currently receives, is the Dutch courts’ interpretation of the Rome II Regulation in a way that allows them to apply Dutch substantive law when deciding actions bringing together claimants from many Member States (7). This means, oddly, that a Spanish claim barred in Spain may not be barred in the Netherlands (if combined with other claims); and that a claimant can obtain higher interest on its damage depending on which country it litigates in. And then there’s the courts’ varying approaches to quantification of damages and access to evidence, their speediness, their specialization in Competition Law, etc.  Repsol  (C-25/21) has told us that, prior to the Directive, final NCA decisions already created a refutable presumption of the infringement, but is this effect limited to the same Member State?

The potential for forum shopping is large, as is the risk for continued heterogenous application of EU Law, which will continue to have the most significant impact on access to justice for those in society who are least informed and most in need of protection.

Conclusion

Let’s be honest: the Directive and the CJEU’s efforts are commendable, but they are half measures. They will never fully create a level playing field or guarantee the homogenous application of EU Law and the effectiveness of the right to damages in every Member State.

The only reason the current decentralized system of private enforcement is working is because most national courts neither utilize the option nor comply with their obligation to send referrals to the CJEU. If they did, the CJEU would quickly be overrun by thousands of referrals. Ironically, it is the (often unwarranted) self-assuredness of national courts when interpreting EU Law, and their lack of cooperation with the CJEU, that makes this system viable. Effective redress of mass harm caused to victims dispersed in the market, be they small businesses or consumers, would require the establishment by the European Union of a robust EU-wide instrument of representative opt-out antitrust damages actions (which are excluded from the scope of  Directive 2020/18), and possibly also of some initiatives by public authorities to secure redress for victims. In the absence of such mechanisms, and in view of the circumstances noted above, we will continue to have underenforcement, and the variety and heterogeneity of how judges in each Member State both interpret the provisions of the Damages Directive and adapt (or fail to do so) national law to the principle of effectiveness will continue.

Sooner or later, the EU will need to take the only measure capable of ending heterogeneity and solving these many challenges: create a European court for antitrust private enforcement. It could possibly be modelled on the Unified Patent Court and it should have jurisdiction (even if not exclusive) for actions for damages based on infringements of Article 101/102 TFEU.

[1] C-312/21 Tráficos Manuel Ferrer (EU:C:2023:99) par. 37.

[2] C-637/17  Cogeco (EU:C:2019:263); C-267/20  Volvo & DAF Trucks (EU:C:2022:494); C-198/22  Deutsche Bank (EU:C:2023:166); EFTA Court judgment of 17/9/18 (E-10/17 Nye Kistlink).

[3] C-133/11 Folien Fischer (EU:C:2012:664); C-302/13 flyLAL (I) (EU:C:2014:2319); C-352/13 CDC Hydrogen Peroxide (EU:C:2015:335); C-27/17 flyLAL (II) (EU:C:2018:533); C-595/17 Apple (EU:C:2018:854); C-451/18 Tibor-Trans (EU:C:2019:635); C-59/19 Booking.com (EU:C:2020:950) and C-30/20 Volvo (EU:C:2021:322).

[4] See  C-425/22 MOL and the Dutch Cases Macedonian Thrace Brewery (NL:HR:2023:660), Power Cables (NL:GHAMS:2023:961) and Italian Cardboard (NL:GHAMS:2023:957), no CJEU reference numbers available yet.

[5] See C-882/19 Sumal (EU:C:2021:800).

[6] See judgment of the Amsterdam District Court of 25/1/23 (Wolfson Capital Ltd v. Google Netherlands NV et al, C/13/722072 / HA ZA 22-674, NL:RBAMS:2023:197).

[7] See, e.g.: judgment of Amsterdam District Court of 27/7/22 (RBP 2022/97,  NL:RBAMS:2022:4466), §§2.11-2.19 and judgment of Amsterdam Court of Appeals of 6/7/21 (NJF 2021/323,  NL:GHAMS:2021:1940) §§5.4-5.16.

Private Enforcement: a Prime Case for Forum Shopping

Thomas Thiede *

The Damages Directive (2014/104/EU) has been implemented by the European Member States since 2018. The law transposing the Directive and the experience with its implementation varies considerably across Europe, for instance with regard to the presumption of damages, class actions or estimation of harm.

Therefore, the rules on jurisdiction and applicable law for cartel damages actions matter. As both are not addressed by the Damages Directive, recourse must be taken to rules of the Brussels Ia and Rome II Regulations, respectively. In the following, I argue that practitioners may use these differences in national law to significantly improve their clients’ position in cross-border cartel cases.

Framework for International Jurisdiction

The initial question to be addressed by a potential claimant is the appropriate forum, that is, the court with adjudicatory jurisdiction. The common European market’s needs have meant that the European legislator has been particularly active in that area. As early as 1968, the Brussels Convention on Jurisdiction and the Enforcements of Judgments in Civil and Commercial Matters was adopted by the Member States of the European Community, coming into force in 1973. The Brussels Convention was subsequently amended by four accession conventions, and was finally replaced by the Regulation 44/2001 on Jurisdiction and the Recognition and Enforcements of Judgments in Civil and Commercial Matters adopted by the EC Council in December 2000. The ‘recast’ of the Regulation entered into force on 1 January 2015 (hereinafter Brussels Ia Regulation).

The Brussels Ia Regulation, like the earlier Convention, lays down rules on direct jurisdiction applicable in the court of first instance to determine its own jurisdiction. In the context of private enforcement with respect to antitrust damages actions, international jurisdiction of the Member State courts is determined primarily by this Brussels Ia Regulation. The Regulation does not specifically provide for any cartel-related rules; hence the general rules must be applied.

General forum at defendant’s domicile

The general rule on direct jurisdiction is provided in Article 4 Brussels Ia Regulation, which states that ‘persons domiciled in a Member State shall, … be sued in the courts of that Member state.’ For any undertakings, Article 4 Brussels I Regulation is extended by Article 63 Brussels Ia Regulation; accordingly, courts have international jurisdiction to hear an action against a defendant undertaking in the place where the registered headquarters or main branch of the undertaking is situated.

* Dr. Thomas Thiede LL.M. teaches European Private Law, Competition Law and Conflict of Laws at number of European Universities and has also contributed to a number of leading academic journals and edited collections. In addition, he practices law in Germany and is a Fellow of the European Centre of Tort and Insurance Law (ECTIL) as well as the European Law Institute (ELI).

Extension of General forum and Single Economic Unit doctrine

It must be duly noted that a rather significant expansion of that general forum can be inferred from a number of CJEU cases, starting with  Akzo (C-97/08 P), followed by  Skanska (C-724/17) and culminating – for the time being – in Sumal (C-882/19).

These rulings essentially concern a quite remote but practically immensely important aspect of the phenomenon known as ‘piercing the corporate veil’, that is, the legal imputation of misconduct between parent companies and their subsidiaries and – notably – vice versa.

Most readers will have been in contact with competition law from a public law perspective and may, for instance, remember cases where the Commission has handed out (at times) considerable fines against undertakings for a violation of Article 101(1) TFEU. With regards to those fines, the principle of joint and several liability is widely accepted since the CJEU’s landmark ruling in Akzo (C-97/08 P). In essence, a parent company is liable for competition law violations by any of its subsidiaries and vice versa.

Competition law, however, provides for a new sibling, subject to this very symposium, namely private enforcement. In that specific area of private law, the above-described joint and several liability of parent companies for competition law violations of their subsidiaries was established only recently in  Skanska  (C-724/17). In that judgment, the CJEU argued for an imputation of liability between a parent company and the subsidiary as their consolidated action represent a single economic unit.

With the Sumal judgment (C-882/19), the CJEU affirms the reversed scenario, that is, imputation of liability from the parent to the subsidiary. According to the CJEU, private enforcement is an essential part of competition law because it aids in deterring undertakings from violating competition law by means of fines as well as by private law actions. In view of the identical purpose, the functional term ‘undertaking’ used in Article 101(1) TFEU, the CJEU held, should also be interpreted identically. Since, in public enforcement, an ‘undertaking’ within the meaning of Article 101(1) TFEU is to be understood as a single economic unit, irrespective of its legal form and the way in which it is financed, this also leads to joint and several civil liability of parent companies for competition law infringements committed by their subsidiaries. As a result, the Grand Chamber of the CJEU reversed the imputation of the subsidiary’s liability to the parent: subsidiaries are also liable for their parent company’s competition law violations, even if the subsidiary itself has not violated competition law.

From a dogmatic perspective, it may well be argued against that judgment that the whole concept of a ‘single economic unit’ was originally based on the idea that the parent company exercises a determining influence on the subsidiary – or ‘uses’ the subsidiary, as it were, to infringe competition law. Of course, in the reversed case at hand, there is a lack of precisely this determining influence. To be sure, the subsidiary does not exercise any determining influence on the parent company and hardly ‘uses’ the latter, as it were, to carry out a violation of competition law. However, such an argument ignores the fact that – at least for private enforcement – only a functional economic external perspective is relevant. Neither the concept of an ‘undertaking’ in Article 101(1) TFEU nor the concept of a ‘single economic unit’ focuses on the legal structure of cartelists. Indeed, from that perspective, any corporate law relationship between undertakings is entirely irrelevant; they are (merely) multiple tortfeasors.

Forum in Tort

This extension of the Single Economic Unit doctrine to jurisdictional issues ultimately fits into a series of unfathomable CJEU decisions, for instance, on special jurisdiction in relation to delictual matters. The system arising from these decisions is predominantly shaped by judge-made law and uncertainties for practitioners are inherent.

To start with, Article 7(2) Brussels Ia Regulation stipulates that in matters relating to torts, a person domiciled in a Member State may sue in another Member State ‘in the court of the place where the harmful event occurred’. The application of this rule is simple in cases where the harmful conduct, that is to say the action eventually leading to the damage, and its result, the damage, are located in the same country.

However, the wording is unclear in cases where the place where the wrongful action took place and the place where the resulting damage arose are actually in two separate states (‘delict over a distance’). The CJEU held in the Bier Case (21/76) that the provision must be understood as covering both the place where the damage occurred and the place where the event giving rise to the damage took place (‘ubiquity principle’) and, as a rationale, referred to the equal proximity of both courts to the wrongful conduct or the damage sustained.

As mentioned, these two places may, and quite frequently do, coincide, but the rule nevertheless poses problems in cases concerning international divisibility of damage. It was initially the  Shevill Case (C-68/93) that demonstrated the ubiquity principle’s disadvantages: following on logically from the  Bier decision, the CJEU first had to confirm that in all those cases in which damage was sustained in numerous legal systems, the courts both at the place of conduct and in all places of damage had international jurisdiction. The CJEU became aware of the possibility of forum shopping and, in response, introduced certain limitations on the claimant’s choice of jurisdiction; the court held that the tortfeasor could be sued at the place of his wrongful conduct for all harm caused, or before the courts of each Member State where damage was sustained by the victim. However, in the latter case, the courts of each Member State have jurisdiction solely in respect of the damage caused within the courts’ own territory. This technique was dubbed ‘mosaic assessment’ as it requires, where damage is sustained in several Member States, that the laws of all Member States concerned will have to be applied on a distributive basis as tiny pieces, thus only collectively giving the complete picture of the mosaic of full compensation. On a positive note, this undeniably worst aspect of the CJEU’s ‘two prong approach’, does not apply to cartel damages actions (cf  CDC,  C-352/13) as there is an exception to the mosaic principle in the case of follow-on actions for horizontal competition law infringements. In these cases the courts at the place of damage are ‘responsible for deciding on the total damage which the allegedly injured company has suffered due to the additional costs for the purchase of the products affected by the cartel’ and the national courts’ competence is not limited to the damage that had occurred within the boundaries of their respective jurisdictions.

Nevertheless, it is essential to determine which court is at the place of conduct, that is, the place where the defendant undertaking caused the harmful event by its actions or omissions. For instance, if an undertaking with a dominant position sells it goods under abusive conditions, and thus excludes third parties from the market, this undertaking acts in this one Member State and the courts of this one Member State have international jurisdiction for the action brought by the third party so excluded.

The question, however, is how to proceed when there is not one single place of conduct, for example when horizontal cartel agreements are at issue. If the place of conduct is understood as the place at which the forbidden cartel agreement was concluded, there would only be a clear, single place of conduct in cases where a cartel was concluded just one time, or at intervals but always in one particular place, such as at a fair that took place annually in the same city, and – for instance – when the cartel participants then confirmed or modified the cartel during this same fair every year. Even at first glance, it is obvious that this sort of ‘organised cartel’ would be scarce; so we are left with the question of how to proceed when participants in cartels make their agreements over years in many different corners of the world. In that case there is a multitude of places of conduct, and thus the risks of forum shopping, on the one hand, and undue restriction of claimant jurisdictions, on the other.

One may argue that the decision to implement the cartel agreement at the cartel participants’ registered seat should be centre-stage. This leads, however, to a situation where the special jurisdiction under Article 7(2) Brussels Ia Reg-

ulation becomes redundant to a large extent; after all, the courts at the defendant’s domicile have international jurisdiction under Art 4 Brussels I Regulation anyway. Perhaps we must accept that it is unimaginable to precisely determine the place of the conduct when it comes to horizontal cartel agreements, and that the places where the cartel was discussed, must be irrelevant for the jurisdictional perspective.

Thus, if the cartel is, for instance, not a well-organised one or if cartelists use modern means of communication, the place of damage – distinctly unlimited by the ‘mosaic assessment’ – becomes exceedingly important. According to the interpretation of the CJEU, the place of the damage is the place where the effects of the event triggering liability occur to the detriment of the victim. Since competition law rules serve the proper functioning of the market, logically the place of the damage must then be localised by reference to markets, specifically as the place where the defendant’s infringement affected the market.

To be sure, the latter definition comes – yet again – with its own set of challenges. For instance, each basis of liability must be considered separately. Where there was an anticompetitive agreement within the meaning of Art 101 TFEU as well as an abuse of a dominant position within the meaning of Art 102 TFEU, jurisdiction in a Member State where either of the two actions took place is established (cf flyLAL, C-302/13), if such jurisdiction is foreseeable for the tortfeasor.

In addition, the question of direct and indirect damage gains importance as the CJEU’s case law establishes that indirect damage does not confer jurisdiction (cf  Kronhofer,  C-168/02;  Kolassa,  C-375/13;  Universal Music,  C-12/15;  Löber,  C-304/17). Thus, for the trucks cartel the CJEU had to clarify that the damage in the form of the cartelists’ overcharge constituted, indeed, direct damage to the plaintiff within the meaning of Article 7(2) Brussels Ia Regulation, even though the trucks had not been acquired directly from the defendant cartelist (Tibor Trans, C-451/18). As a result, the extension of the Single Economic Unit doctrine as described above seems superfluous for the jurisdiction in tort as any purchase (even from a subsidiary) establishes damage within the meaning of Article 7(2) Brussels Ia Regulation.

Forum for ‘connected claims’

If there is a large number of defendant undertakings within the above meaning who participated in a cartel, it may be that full compensation can only be obtained if each participant undertaking is sued where it has its registered seat or where the relevant impact on the market occurred. The only practical way out of this dilemma is an action in one place of jurisdiction for closely connected claims.

Pursuant to Article 8(1) Brussels Ia Regulation, several defendants may be sued jointly at the court of the state in which one of them is domiciled, provided that the claims are so closely connected that it is expedient to hear and determine them together collectively to avoid the risk of irreconcilable judgments being rendered in separate proceedings. In other words, practitioners thus have the option of examining the respective national implementations of the Damages Directive in this respect in the places of general jurisdiction where the members of the cartel are based. They may then bring the action against one of the undertakings with its domicile in this legal system as the main defendant, and thereupon extend the action to all of the other infringers in the cartel under Article 8(1) Brussels Ia Regulation.

In favour of this approach, it may be said that one of the largest claimants in cartel damages actions within the context of the so-called bleach cartel, Cartel Damage Hydrogen Peroxide SA (‘CDC’), chose exactly this path. Presumably in light of the claimant-friendly German rules, CDC jointly sued six undertakings (which had already been prosecuted and fined by the European Commission) with registered seats in different Member States and of which only one was based in Germany (as the main defendant) for damages before the German Regional Court (‘Landgericht’) Dortmund, and invoked in this respect Article 8(1) Brussels Ia Regulation.

The subsequent actions taken by CDC seem truly astounding from a strategic, litigational perspective, and will be described here succinctly: After the claim was served on all defendants in the initial proceedings, but before the time had expired for the submission of answers to the claim and the beginning of the oral hearing, CDC dropped the proceedings against the German undertaking (as main defendant) on the basis of a settlement. The Regional Court of Dortmund was thus confronted with the question of whether Article 8 (1) Brussels Ia Regulation is also applicable when the main defendant is no longer being sued at its place of domicile by the claimant and referred this question to the CJEU.

Although it was rather dubious in light of the prior Melzer case (C-228/11) – after all good arguments may be found for denying the jurisdiction when the main defendant is no longer part of the proceedings – the CJEU accepted the German court as internationally competent to adjudicate on the matter (CDC, C-353/13). Despite the fact that the CJEU – as the court always does – payed lip service to the requirement that any jurisdiction granted by Article 8 Brussels Ia Regulation must be strictly interpreted, the CJEU argued that the one and only ground on which the settlement with the anchor defendant would have prevented the application of Article 8(1) Brussels Ia Regulation would have been if the parties had ‘colluded to artificially fulfil, or prolong the fulfilment of, that provision’s applicability’. Without more, this is an extremely narrow foundation on which to base the applicability of Article 8(1) Brussels Ia Regulation, and it obviously runs afoul of the requirement of strict interpretation.

In connection with the recent extension of the general forum the judgment in CDC will most certainly trigger even more opposition. Following the extension of Article 4 Brussels Ia Regulation, the forum for ‘connected’ pursuant to Article 8(1) Brussels Ia Regulation is extended as well – to the subsidiaries. Thus, I argue, a claimant may bring an action against one of the undertakings subsidiaries as the main defendant, and thereupon extend the action to all of the other cartelists under Article 8(1) Brussels Ia Regulation. As this will indubitably result in quite a number fori, the theory is highly debatable and quite a number of preliminary references on the question of subsidiaries as anchor defendants in light of Article 8(1) Brussels Ia Regulation have been rendered recently.

Applicable law

The next step in our international scenario relates to the applicable substantive private law. In order to determine which state’s substantive law governs the dispute at hand, the internationally competent court must determine which choice-of-law rule applies. Then, on that basis, the court must establish which State’s private law to apply. In other words, after the court has selected the applicable choice-of-law rule and has made the choice between the ‘competing’ substantive Member State’s laws it can proceed to determine the substantive outcome on the basis of the chosen law.

It seems quite obvious that undertakings engaging in cross-border anti-competitive activities, in terms of economic size and impact, mostly operate on the entire European internal market. As a result, discussions on the choice-of-law rules nurse fears of the applicable law’s fragmentation. Given the limited harmonisation on substantive law issues in the Damages Directive, the applicable law is of considerable importance. At first glance, the applicable Article 6 para 3 lit a  Rome II Regulation seems to prove that point, as it stipulates that the law applicable to non-contractual obligations arising out of a restriction of competition is the law of the country where the market is affected. It seems, where damage is sustained in several Member States, the laws of all Member States concerned will have to be applied on a distributive basis.

Bearing in mind the differences in each jurisdiction as well as divergent codification techniques, such a Herculean task cannot be left to judges – and was accordingly addressed by the European legislator. According to Article 6 para 3 lit b Rome II Regulation, where the market is affected in more than one state, claimants (who sue in the court of the –extended (!) – domicile of the defendant) may choose to base their claim on the law of the seized court, provided that the market in that Member State is amongst those directly and substantially affected by the restriction of competition

out of which the non-contractual obligation the claim is based on arises. In other words, where private parties sue for damage caused by a sizable European cartel, they may choose the law at the domicile of one of the cartelists or their subsidiaries (!) as the law applicable to the anti-competitive action in the rest of the world.

Forum Shopping

To sum up, pursuant to Article 8 no 1 Brussels Ia Regulation several cartelists can be sued together in the general forum of just one cartelist provided by Article 4 Brussels Ia Regulation. The latter courts are internationally competent to hear an action against a defendant undertaking at the place where the registered headquarters or main branch of the undertaking is situated – or where their subsidiaries have a seat. Article 6 para 3 lit b Rome II Regulation then provides for the applicable law to be concentrated on the law at that general forum of the defendants (and defendant’s subsidiaries).

In a cross-border scenario victims of anti-competitive conduct then could have a close look at the respective implementation of the Damages Directive in the European Member States. A prime example may be Hungary, Latvia or Romania, where a presumption of damage is available – or Spain with a lively number of cases as well as the Netherlands with an elegant ‘concentration procedure’. Where a Member State’s competition law appears particularly favourable, the cartelist or cartelist’s subsidiary may be sued there, the other cartelists may be included as ‘connecting claim’ and the applicable law concentrated to that forum.

Spanish Antitrust Litigation: Ecstasy and Failure

Eduardo Pastor *

The scene of the fulling mills is one of the most famous ones in Don Quixote and, in turn, the most universal exponent of the Spanish character, always a step away from the sublime and the ridiculous. The episode finds Don Quixote and Sancho camping out in the wilderness on a night of darkness, surrounded by a dull silence, finally broken by a terrible roar that overcomes the melody of an unknown fountain. The knight and his squire assume the noise to be of supernatural origin and, the first ready for battle and the second in panic, they wait until dawn to discover that the sound came from a modest textile craft. Things are not always what they seem and, despite the suggestion of the fantastic, it is not advisable to lose touch with reality.  The ability not to take oneself too seriously and to face any situation with a smile are also the best way to learn and improve in everyday life.

The Spanish Scene

Many Spanish and European authors have shown that Spain has been faced with a plethora of follow-on damages actions, especially in the Trucks case, ever since the entry into force of the Damages Directive. Until then, Spanish experience in the private enforcement of competition law was quantitatively and qualitatively limited. This has caused Spanish judges to face this situation, in terms of the overall system, in a real context of uncertainty. Spanish law lacked a specific substantive but moreover procedural regime on antitrust damages actions, which meant that this litigation was based on the general rules of civil liability for damages. The technically difficult transitional rule on the Damages Directive increases these uncertainties. Spanish judges have been compelled to create a civil liability that is open to competition law specialties, even if it is not entirely self-sufficient. On the other hand, the Spanish civil procedural system and the very method of judicial selection and training provides a slightly specialised model of judges and, above all, as static as the Spanish procedure itself, which responds to a very marked adversarial model and to rigid rules that interfere with the parties’ capacity for allegation and proof, with the necessary dynamic nature of the process when its object is complex and with the opportunities to manage it efficiently.

In practice, Spain is organised as a kind of federation that has opted for the decentralisation of power. In general, Spanish judges and courts are only specialised by their assignment to one of several jurisdictional orders: civil, criminal, administrative, labour and military. Within the civil jurisdiction, Spanish commercial courts and judges are a major exception, as they limit their powers to a range of competences in commercial matters, including antitrust litigation. However, this does not actually represent a decisive strategic advantage in its current design. This stems from the fact that the commercial courts’ main purpose is to deal with insolvency law. In general, they lack additional technical support for the examination of complex matters which are economic in nature. Indeed, the Spanish jurisdictional model does not allow for an allocation of the panels of judges according to expertise in the matter in question nor can an expert be involved in the procedure. Spanish judges must decide the dispute on the sole basis of the evidence provided to them by the parties and with the guidance that the experts appointed by the parties are able to propose

* Eduardo Pastor is a judge at the Commercial Court No. 3 of Valencia.

to them. And they must do so in a compelling context. Because the Spanish legal economy model, with thousands and thousands of practitioners determines that litigation tends to be fragmented, due to its individual nature.

Ecstasy

The strength of the Spanish judicial system lies in the will and working spirit of its commercial judges. Thus, in a comparative context that is not very favourable, it can be seen that, precisely since the entry into force of the Damages Directive, it has been the Spanish commercial judges who have exercised real leadership in the development of the private application of competition law in Spain and Europe overall. So, if the harmonisation of competition law can be explained by the influence of CJEU caselaw, it was the Spanish judges who, to a great extent, have referred the relevant private enforcement cases to the CJEU in the recent years. The CJEU’s position on issues such as new applications of the theory of economic unity, the proportionality requirements of the disclosure system included in the Damages Directive, the correct interpretation of its transitional law rules, the notion of universality to distribute competences between Member States, or even the conditions for the judicial estimation of the damage, have a Spanish origin.

Failure

However, the weaknesses of the Spanish jurisdictional system begin with the insufficient specialisation of its lawyers and a lack of concentration of cases. The absence of a class action system and a proper institutional infrastructure for safeguarding consumer interests results in repetitive and ineffective litigation, which undermines the efforts to strengthen antitrust civil liability law and to establish a more robust and reliable jurisdictional system. The tendency towards sophistication and a certain disruptive nature of some antitrust rules have both contributed to diverting the attention of many of our judges from what is most necessary for the resolution of these cases: learning to better assess the available evidence, according to its economic formulation, without shying away from its complexity. The good predisposition of our competition authority, the National Markets and Competition Commission (CNMC), does not make up for these shortcomings, despite the best intentions of its professionals who have enough on their own plates. Thus, the complementarity between the public and private facets of competition law in Spain is, rather, wishful thinking.

Therefore, while awaiting the rulings of the Spanish Supreme Court on the definition of a sufficiently clear doctrine, two certainly contradictory litigation itineraries are being pursued. On the one hand, the emergence of higher litigation forums, perhaps not free of contradictions, but capable of giving the trial the attention that this kind of litigation deserves, is to be both something to be proud of and a development inspiring great intellectual interest. Among these judges, there are two main lines of thought. The first pertains to those who have emphasised the importance of the effectiveness of the right to full compensation for those parties who have suffered harm because of an anti-competitive infringement. The second pertains to those who have emphasised the compensatory rather than punitive nature of civil antitrust liability, as our leading-case shown a decade ago, when the Supreme Court admits the passing-on defence. A beautiful and enriching dialogue is currently taking place between these two lines of thought. Nonetheless, there is also a wide range of areas for light and arbitrary prosecution, favouring an opportunistic litigation model which, due to the defensive attitude of our Supreme Court as expressed in some recent pronouncements, will escape the unifying effect of its doctrine.

Conclusion

None of the above should be taken as overly alarming, or even frightening. Spain suffers the inherent consequences of its lack of maturity in this field of law. Spanish judges, like most of our European colleagues, need some more time to test this legislation, measure its solutions, note its inadequacies and suggest some improvements.

In the case of Spain, three measures have already been identified as required. First, to increase the degree of specialisation and training of some of our judges in this field, so that they can form a more specialised and efficient litigation circuit, without losing sight of the need to preserve our model of territorial organisation of the judiciary. Second, to reduce the number of current litigation cases by spreading the use of collective redress remedies that will allow us to better concentrate the resources of our judicial system on factually or legally complex cases. Third, to increase cooperation between judges and the CNMC, to create a common understanding and signalling best practices.

Right now, in Spain, close as we are to the dawn of our consolidation as a prime jurisdiction for the private enforcement of competition law, it is time to rely on our strengths and, also, to admit our weaknesses. This is important so that we can, without fear, continue contributing positively to European citizens and companies.

The Critical Role of (Potential) Cost Claims by Intervening Parties in Private Enforcement Proceedings. An Austrian Example

Florian Neumayr and Ana Toncoglaz *

There is a lot of discussion around the effectiveness of private enforcement when it comes to cartel damage claims. Apart from the question how the substantive law works or the degree of sufficiency in its application in practice, which, as a matter of course, affects the effectiveness of competition law enforcement, there are also less obvious aspects. A potential plaintiff will consider the prospects of success. With the risk of losing, and be it only partly, comes the question whether and to what extent the losing party may be liable to reimburse costs incurred by the other party or indeed parties. In particular, in cartel damage claim cases, there is usually more than one defendant and there may be several intervening parties such as cartelists that have not directly been sued but are invited by one or more defendants to join the proceedings. Furthermore, competition specific procedural tools, such as disclosure or the necessity both for party and court appointed expert opinions may increase the costs accordingly. But even in the event of rather straight forward proceedings intervening parties have costs (briefs, attendance of hearings, etc). It is the claims to costs by such intervening parties this contribution focuses on from the perspective of Austrian law of civil procedure and effet utile considerations.

Pursuant to Section 41 of the Austrian Code of Civil Procedure, the ordinary intervening party is entitled to claim compensation for legal costs if “their” main party prevails (ie, in the present context, the defendant cartelist), but cannot itself become liable for costs if the main party loses. This provision was challenged as arguably in-constitutional. However, the Austrian Constitutional Court concluded that although the intervener’s claim for compensation is not accompanied by a corresponding cost risk (by the intervener), the exclusion of a compensation obligation for the intervening party can be justified. This is because the intervener does not enjoy independent influence on the outcome of the proceedings; rather, the intervening party is at least to certain degree dependent on the main party (VfGH G234/2019). Further, the Court did also not find a violation of the principle of fair trial (due proceedings and equality of arms) within the meaning of Article 6 (1) ECHR.

At the time of the ruling, there were already several private enforcement proceedings pending against the background of EU and Austrian competition law infringements. Hence, it cannot be concluded that the Constitutional Court surely did not take the typical – and arguably different – circumstances of cartel enforcement actions into account. Nevertheless, the practical outcome can deter potential plaintiffs and their funders, respectively, and ultimately may be an issue for the ECJ to someday give a preliminary ruling on. To put this into perspective: Even if a plaintiff sues only a single cartel member (maybe the direct business partner), it cannot prevent third-party interventions. In order to join as an intervening party, possible recourse claims of the main defendant (stemming

* Dr. Florian Neumayr LL.M. (Nottingham) is co-managing partner of a large Vienna based commercial law firm. He co-heads the Dispute Resolution and the Antitrust Practice Groups. He is also a member of numerous associations including the ICC Task Force on Antitrust Damage Claims and the German Association for Antitrust Law (Austrian Section).

Ana Toncoglaz is a law student of the University of Vienna and a paralegal with the said Viennese law firm.

This Op-Ed is written in authors’ personal capacity and the views set out herein are not attributable to those of the firm or their clients.

from joint and several liability for cartel damage claims) are generally regarded sufficient for the required “legal interest” criterion to be allowed as an intervener pursuant to Section 17 (1) of the Austrian Code of Civil Procedure. This not only makes all cartelists likely interveners – be it on their own motion (pursuant to Sections 17 et seq. of the Austrian Code of Civil Procedure) or following a third-party notice by the main defendant (Section 21 of the Austrian Code of Civil Procedure) – but also others.

Such further potential intervening parties are, on the one hand, affiliated companies of the cartel participants and individuals acting on their behalf, such as (former) managing directors. Moreover, one can also think of direct purchasers of the cartelists in cases where an indirect customer sues and vice versa (cf Section 37f (4) of the Austrian Cartel Act).

Therefore, a plaintiff may face a significant number of parties on the other side. A number which is ultimately out of its control, and for each intervening party, plaintiff may eventually be liable to pay costs. This makes the cost risk particularly hard to determine and leads, in practice, to proceedings – in particular, where they are funded by professional financiers – being brought elsewhere (provided there is sufficient nexus to such other jurisdiction, which often there is) but in Austria as an otherwise very well-functioning legal system. One might be tempted to argue that with all the “help” (potential) plaintiffs are receiving from the broad interpretation of competition law as a basis for private action by the ECJ (cf., for example, C-557/12  Kone and  C-435/18  Otis), a cost risk may be seen as “the other side of the coin”. However, such line of argumentation would confuse practical implications with the scope of the applicable law.

One may, however, ask whether the current Austrian law on costs is fully compatible with the effet utile jurisprudence by the ECJ. The Court applies this principle not only in the context of competition law but generally to help EU law achieve practical effectiveness. The principle stems from Article 4 (3) TFEU, which obliges the Member States to make the application of EU law as effective as possible. Particularly, the question may be raised whether a “risk free” (at least in terms of cost compensation) multiplication of defending parties in cartel damage claim cases does not hinder the full effectiveness of the prohibition of cartels (Article 101 TFEU) and its private enforcement. To date, this has not specifically been tested but Austrian cases have already several times triggered mile stone preliminary rulings by the ECJ (see, amongst others, the cited cases in the previous para).

Moreover, the ECJ already gave an interesting preliminary ruling in C-312/21 Tráficos Manuel Ferrer that EU law does not preclude a national rule of civil procedure according to which, an – in  that case partially – unsuscessful claimant bears its own costs and part of the common costs if these costs originated in the excessive claims made or how the proceedings were conducted. However, as noted above, how many interveners are joined to damage claims proceedings is not really in the hands of claimants. Moreover, the mere prospect of the far reaching cost compensation rules can have a deterring effect (as is observed in practice, where even Austrian claimants tend to sue in foreign fora if they find sufficient nexus to such.

De lege ferenda, it appears wise to reconsider the Austrian rules on costs when it comes to intervening parties. It is interesting to note that when the EU Damages Directive was to be transposed into Austrian law, statements from practitioners highlighted already problems of the Austrian cost regime (including providing illustrative  examples from practice of how much a comparable legal dispute would cost elsewhere and in Austria – statement  24/SN-230/ ME by CDC on the Austrian Ministerial Draft Federal Act amending the Austrian Cartel Act).

A solution could be that intervening parties are only awarded part of their respective costs and that there is a maximum compensation for all parties on each side (together; cf, in this context, also Section 89a (3) of German Act against Restraints of Competition). For the Austrian Supreme Court it was an important consideration that the intervening party has no independent influence on the proceedings. Taken that as a given, why would they, on the other hand, have to be fully compensated as if they were the main defendant?

The Passing-On Defence: Don’t let the Money stay in the Pockets of the Cartelists

Antonio Robles *

“The notion that the loss suffered by the Claimants because it paid the Overcharge can be reduced or avoided completely as a result of commercial decisions in relation to the pricing of their own products is curious from a legal perspective”.

(Royal Mail and BT v DAF Trucks Limited and ors [2023] CAT 6, para. 178).

Damage caused by infringements of the EU competition rules can be passed on, in the form of overcharge, along the production or distribution chain. Under the  Damages Directive, where the passing-on of the overcharge is successfully claimed and proven by the defendant, the compensation must be reduced correlatively. However, it is possible that indirect purchasers (purchasers from the plaintiff or another indirect purchaser) have no interest in claiming the overcharges passed on to them. This could happen because the damage incurred by them is too small in relation to the cost of litigation, especially when the damage becomes excessively fragmented to remain forensically identifiable. Furthermore, the indirect purchaser may simply decide not to sue for reasons of expediency, as in the case of some public administrations. As a side note and in relation to the latter scenario, which is all too frequent in some Member States, one may wonder whether the Directive on Public Procurement, just as it gives contracting authorities the possibility to exclude economic operators who have committed infringements of the competition rules, should not oblige the same authorities, in the interest of taxpayers, to claim damages caused by such infringements or, at least, to explain why they do not do so.

In such cases where the indirect purchaser has no interest in claiming the overcharges passed on to them, courts are faced with a dilemma: one option is to allow the amount of damages to remain in the pocket of the cartelist, as the  Barcelona Court of Appeal has done in the case of the paper envelopes cartel; the other is to consider that the cartelists should be liable to pay the claimants the whole overcharge without any deduction or any other form of mitigation in the sense of a passing-on defence (if appropriate, setting aside some portion of the damages to await claims that might be made by indirect purchasers), as the Competition Appeal Tribunal has more recently stated in relation to the trucks cartel.

In my view, the latter is the only unsatisfactory solution, according to a proper interpretation of the legal meaning of the passing-on defence and of the requirements for its application.

It is a legal, not an economic concept: its factual existence does not necessarily determine its legal relevance.

The passing-on defence cannot be applied in a mechanical (economic) manner, as the  Barcelona Court of Appeal applied it. The assessment of the existence and extent of the passing-on is not just a question of fact (for which,

* Antonio Robles Martín-Laborda (antonio.robles@uc3m.es) is Assistant Professor of Commercial Law at the Universidad Carlos III de Madrid and director of the Postgraduate Course of Specialisation in Competition Law. He has been founder and President of the Spanish Academic Association for the Defence of Competition.

according to the Directive, the burden of proof lies with the defendant), such that the defence must be accepted whenever it is proven that the passing-on has occurred from an economic point of view.

On the contrary, as the Competition Appeal Tribunal established, the question for national courts is a matter of what is legal pass-on, not what an economist would say or what the business actually did: “[…] some of the problems in this area have been caused by an element of confusion between the economic concept of “pass-on” of a business’s costs and the legal test for causation in relation to mitigation of loss” (para 189).

Passing-on is a legal concept, not an economic one.

It is a legal concept of EU law, but the conditions for its application are laid down by national law.

It is, moreover, a legal concept of EU law, although the conditions for its application are laid down by national law. Indeed, as the general principles of EU law and the Damages Directive remind us, in the absence of European Union rules on the quantification of harm beyond the recognition of the passing-on defence, the reduction of the amount of damage susceptible of compensation resulting from the application of the defence has to be made within the framework of the national rules on quantification of damage (recital 46 Damages Directive).

On the one hand, the passing-on defence requires, in any event, that the claimant has passed on all or part of the overcharge resulting from the infringement of competition law, i.e. the existence of a causal link between the infringement and the alleged passing-on of the overcharge by the injured party. Since the Directive does not regulate the causal link between the infringement and the passing on of the overcharge, it is up to the Member States to establish the requirements for its application, this procedural autonomy being limited by a broad concept of effectiveness (e.g.,  Kone,  Otis). In relation to factual causation or cause in fact, according to national tort laws, it is not generally sufficient that the defendant proves that prices on the aftermarket also increased in the period following the infringement, but that the increase in the price is a consequence of the infringement, i.e. that the price set by the plaintiff is not the consequence of a commercial decision at her own risk, but that it is higher than the price that would exist if the infringement had not occurred.

Moreover, as the  Practical Guide on quantifying antitrust harm in damages actions  recalls, national courts are empowered to quantify the harm suffered on the basis of equitable considerations, taking account of the unlawful profit made by the infringer (paras 4-5). More specifically, the  Passing-on Guidelines notes that they have to consider the passing-on defence under the rules and principles of national law, such as compensatio lucri cum damno, provided that they comply with the principles of equivalence and effectiveness (para 15). Therefore, in Member States that allowed the defence prior to the adoption of the Directive, the general requirements for its application to the specific case could still be applicable to actions for infringement of competition law. Furthermore, in Member States that did not allow the defence, it could be possible to impose – once it has been introduced as a special rule by the Directive –additional requirements for its application to the specific case in accordance with the principles and rules of national law. This means that, despite the fact that the passing-on had occurred from an economic point of view, the defence may be rejected for legal grounds (other than the absence of causation) arising from the general principles of national tort law. In this way, the German Federal Court has held that the deduction must correspond to the purpose of tort law, must be reasonable for the injured party and must also not unjustifiably relieve the injured party ( paras 51-58); to this end, national courts should take into account whether, according to the legal and economic circumstances of the case at hand, the claim of indirect purchasers against the infringers of competition law is to be expected or not ( paras 89-103).

It is to be interpreted restrictively, without undermining the effectiveness of the competition rules

In applying their national law, finally, national courts have to take into account that the passing-on defence has to be interpreted restrictively, without undermining the effectiveness of the competition rules.

In this sense, the passing-on defence is not required by the principle of effectiveness nor by any general principle of European tort law. It is in fact a special rule introduced in many national legal systems – at least in its current form and scope – by the Damages Directive. Although the introduction of the defence is justified as a necessary consequence of the adoption of the compensatory principle underlying the Directive, it also underlies most national tort systems, without the admissibility of the passing-on defence necessarily being recognised as such in these systems before the entry into force of the Directive. In fact, neither in national tort law systems nor in existing works on the principles of European tort law is the passing-on defence allowed, as it is configured in the Damages Directive. According to national tort laws, benefits must be immediate and direct conquences of the tort in order to be deducted from damages, so that benefits received by the plaintiff from a source collaterlal to de defendant may not be used to reduced the defendant’s liability. Article 10:103  (Benefits gained through the damaging event) of the  Principles of European Tort Law states: ‘When determining the amount of damages benefits which the injured party gains through the damaging event are to be taken into account unless this cannot be reconciled with the purpose of the benefit.’  In a similar vein, Article VI. – 6:103 (Equalisation of benefits) of the Draft Common Frame of Reference provides: ‘(1) Benefits arising to the person suffering legally relevant damage as a result of the damaging event are to be disregarded unless it would be fair and reasonable to take them into account. (2) In deciding whether it would be fair and reasonable to take the benefits into account, regard shall be had to the kind of damage sustained, the nature of the accountability of the person causing the damage and, where the benefits are conferred by a third person, the purpose of conferring those benefits.  On the contrary, under a broad interpretation of the Directive, it would be possible for the compensatio of benefits that come from a different and subsequent legal transaction (the resale of the goods affected by the infringement) to the event giving rise to the damage (which is carried out with malice), which is not for the purpose of compensation, and are obtained from sources outside the infringer (such as indirect purchasers), through the performance of a conduct (the increase of its own prices) that cannot be demanded from the injured party.

Moreover, irrespective of the legislative policy decisions underlying the Directive, the purpose of damages claims is not only compensatory, but is part of the system for the effective enforcement of competition law prohibitions and complements the public enforcement of these provisions by the competition authorities. As the Court of Justice has established, the right of any individual to claim compensation  “actually strengthens the working of the European Union competition rules, since it discourages agreements or practices, frequently covert, which are liable to restrict or distort competition, thereby making a significant contribution to the maintenance of effective competition in the European Union”.

Therefore, the defence should not be applicable when it serves the infringer to avoid civil liability by keeping the fruits of the unlawful conduct, which would be contrary to the effectiveness of the competition rules.

The Parental Liability in Private Enforcement of EU Competition Law Marco

Pasqua *

1. Introduction: the reference framework

In general, the corporate group is the union of several companies, legally distinct from each other (parent company and many subsidiaries) but economically connected, in order to realize a common interest and the liability of corporate groups is a pragmatic legal approach that would like to pierce the corporate veil in order to extend the liability for claims in contract and tort to the companies of the group.

Bearing in mind this general framework, in the context of EU competition law the notion of undertakings under Arts. 101-102  TFEU determines the addressees of these provisions, i.e. the subjects who are obliged to comply with and behave in such a way as not to distort the competitive structure of the market. As a result, because it a matter of determining the scope of application of EU competition law, the undertaking notion must be object of an EU autonomous interpretation. Nonetheless, a definition of undertaking has not been positivized in the Treaties of the EU legal order, and the reconstructive interpretation on the boundaries of undertaking notion in the settled case-law of the Court of Justice of the EU and in the European Commission practice has led to the development of the doctrine of the single economic unit.

According to this doctrine, undertaking can be the result of  ‘economic entities which consists of a unitary organization of personal, tangible and intangible elements, which pursue a specific economic aim on a long-term basis’  (Akzo Nobel,  T-112/05, para 57); consequently, under this theory, the undertaking notion must be understood in the sense that it designates ‘an economic unit even if, from a legal perspective, that unit is made up of several natural or legal persons’ (Siemens,  C-231/11 P to C-233/11 P, para 43, and case law cited). Thus, in doing this fundamental step, the autonomy from a formal point of view among two persons as a result of their distinct legal personality is irrelevant, whilst from a factual point of view the unity of their conduct on the market is decisive.

Consequently, in the event of violations of competition rules by such an economic unit, it is for that economic entity to be considered liable for that infringement. However, because it is then essential to identify a legal person to be charged with for the violation in both public and private enforcement, doubts may arise as to which is the legal entity liable within the single economic unit.

In order to ensure the effectiveness of EU competition law rules, several theories have been developed as to liability in the single economic unit: the parental liability (i.e. the liability of the parent for the subsidiary anti-competitive practice), the subsidiary liability (i.e. the liability of the subsidiary for the parent anti-competitive practice) and the sister liability (i.e. the liability of the subsidiary for the sister-company anti-competitive practice).

Among these forms, this contribution will focus on parental liability.

* Marco Pasqua is a PhD Student at the Catholic University of the Sacred Heart of Milan and Teaching Assistant at LIUC – Carlo Cattaneo University.

2. Parental liability

The concept of parental liability refers to the phenomenon whereby the parent company may be liable for the anti-competitive practices committed by its subsidiaries.

Indeed, the anti-competitive practice of a subsidiary can be attributed to the parent company when, ‘although having separate legal personality, that subsidiary does not decide independently upon its own conduct on the market but carries out, in all material respects, the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links between those two legal entities’ (Areva, C-247/11 P and C-253/11 P, para 30, and case law cited).

To this end, two cumulative conditions shall be met:  the parent company must have the ability to exercise a decisive influence over the subsidiary and, above all, it must have exercised this influence in practice.

In order to assess if they are met, the examination of the application practice of the European Commission, National Competition Authorities and of the national courts’ case law reveals that in principle one looks first at the percentage of share capital held by the parent company, which must be such as to constitute a hypothesis of control, exclusive or joint; secondly, a great variety of other elements has to be scrutinised (see here, pp. 1086-1087).

In relation to the first, the settled-case law has come to affirm that ‘in the specific case of a parent company holding 100% of the capital of a subsidiary which has committed an infringement, there is a simple presumption that the parent company exercises decisive influence over the conduct of its subsidiary’ (Akzo Nobel, C-97/08 P, para 60) unless it provides sufficient evidence to prove that its subsidiary behaved independently on the market; the same conclusion has been reached in the case of a shareholding close to 100% (Armando Álvarez,  C-36/12 P, para 18). In relation to the second, just a few of many examples: where the parent company held all the voting rights associated with its subsidiary’s shares and a very high majority stake in the share capital of that subsidiary (Goldman Sachs,  C-595/18 P, para 17), and in the case of a joint venture (Dow Chemical, C-179/12 P, paras 58-65).

Reading the main European Commission decisions and the case law of the Court of Justice of the EU highlights the extreme difficulty for companies to provide the evidence to the contrary required to overcome the presumption. Consequently, the question has arisen as to whether there is any room to overcome this presumption, or if the probability of succeeding is so remote that the presumption is in reality conclusive, thus leading to a (possible) contradiction with the principles of legal certainty, personal liability, fault and presumption of innocence as well as other obscure sides being hidden. However, these critical issues in terms are justified on the consideration that parental liability is a necessary compromise to reconcile, on the one hand, the single economic unit as the atom of the EU autonomously born competition law and, on the other hand, the aforementioned principles under domestic legal orders, and which forced to square the circle by dissociating the concepts of author and liable person.

This aspect, apparently theoretical, in reality hides important practical repercussions since it determines presumptions and the bidirectionality in the imputation (Sumal,  C-882/19) which make palatable (and can only be explained by) in domestic legal orders the extended liability within the undertakings.

3. Parental liability in the private enforcement

In the private enforcement of EU competition law, two main reasonings have been put forward with regard to parental liability.

The first lies in the possibility of replicating, exactly, parental liability in private enforcement. Indeed, the undertaking’s notion, in the specific framework of EU competition law, is that related to a unit from the economic perspective, although it includes multiple persons legally distinct each other. When such economic entity infringes

the competition rules, it falls, according to the principle of personal responsibility, for that unit to answer for that infringement. Then, since the violation of EU competition law must be imputed unequivocally to a legal person deemed to pay for damages, the anti-competitive practices of a subsidiary can be attributed to the parent company if, despite having a separate legal personality, it does not self-determine on the market but rather follows the directives of the parent company from whom it strictly depends.

On the other side, a different rationale would like the doctrine of parental liability not to be replicated in the private enforcement. Due to the lack of an express provision in EU law in this regard, this exclusion would be based on the distinct legal personality and limited liability rules under domestic company law of EU Member States (appellants in  Schindler,  C-501/11 P, para 101). It seems as advancing a distinction between private enforcement, where the principle of separation of liability operates, and public enforcement, where it does not.

This author, considering the previous two, advances the following reading. At this point, an in-depth study on remedies in case of violation of EU competition law is necessary, i.e. the substantive and procedural tools to enforce those rights granted directly under EU law in order to ensure a judicial protection in the private enforcement.

According to a traditional approach, in cases of breach of EU rules (EU substantive rules) aimed at granting rights directly to individuals (EU-based rights), in the absence of EU rules on the matter, it is for the national legal order of each Member State to establish rules for actions intended to safeguard the rights of individuals, according to the principle of national procedural autonomy, with the limits of the equivalence and effectiveness principles (Lucio Cesare Aquino, C-3/16, para 48, and case law cited).

Rather than following this traditional approach, the new and modern approach, in the wake of the so-called ‘hybridization of remedies’, does not approach the remedy-related issue starting from domestic law, but starting from EU law. As a result, starting from EU law, first it is to be clarified all substantive and procedural conditions directly disciplined under Arts. 101-102 TFEU. Only after, for the residual conditions, the (eventual) referral is to domestic law, within the limits of the two principles of equivalence and effectiveness.

The implication, in starting from (and relying upon) Arts. 101-102 TFEU in such damages claims, and so deriving from them all conditions allowing the full effectiveness of these provisions, are mainly twofold: on the one hand, all the autonomous notions elaborated under EU competition law could be used and invoked in the proceeding; on the other, there would be a uniform discipline throughout the EU, avoiding the discriminatory problem of having different applications in EU Member States in the case of relying upon different domestic laws.

This way of reasoning, then, allows to overcome the second rationale mentioned above because it is EU law, in the maximum expansion of the horizontal direct effect of Arts. 101-102 TFEU (Courage, C-453/99; Manfredi, C-295/04 to C-298/04), that directly defines who is the person against whom to file the civil claim for compensation, eliminating the need later on to seek the answer on this aspect in the domestic law concerned. This way of reasoning, then, deepens also the first rationale indicated above. The effectiveness principle has been interpreted extensively in competition damages claims into some ‘qualified full effectiveness’. Presumptions of parent liability is a good example of something necessary for the practical outcome desired by this ‘qualified full effectiveness’, as in the identification of the person obliged to comply with obligations arising out of EU competition law, and therefore civilly liable in the event of a violation, which is a problem of interpretation of the EU primary law concerned only.

4. The confirmation in Skanska and Sumal cases

The Court of Justice of the EU, dealing with the private enforcement and corporate group relations in two rulings, aims at confirming this rationale.

In the Skanska case (Skanska, C-724/17), it stated that it is EU law to determine who can be sued in this competition damages litigation and having the passive legal standing, being this ‘a constitutive condition of liability governed by EU law’ (Opinion of Advocate General Wahl in Skanska, ibid., para 60) and so it could not be otherwise, because full effectiveness would be undermined leaving space room for forum shopping.

In the Sumal case (Sumal, cit.  supra), the Court of Justice of the EU seems to go even further where it stated that ‘the concept of an ‘undertaking’ and, through it, that of ‘economic unit’ automatically entail the application of joint and several liability amongst the entities of which the economic unit is made up at the time that the infringement was committed’ (Sumal, ibid., para 44). By affirming that the very existence of an economic unit to be the relevant element for the attribution of the liability to one or other companies composing the undertaking, the Court of Justice of the EU seems considering the decisive influence test important for the purposes to establish that an economic unit exists. Then, the liability for the anticompetitive infringement can potentially be claimed for against all members of this economic unit.

And it could not be otherwise. Indeed, the latter is the only way to reconcile with the undertakings being the subject of EU autonomous competition law. Any other solution, which places an obstacle to the possibility of claiming against a member to the single economic unit, would be an intolerable limitation to the full effectiveness of the EU competition law under Arts. 101-102 TFEU, currently so advanced as to be ‘qualified’.

5. Practical repercussions

Parental liability within the single economic unit provides for many practical implications.

Let’s deal with the jurisdiction matter.

The rules on jurisdiction in matters relating to cross-border anti-competitive practices are to be found in the Regulation (EU) No 1215/2012 (Brussels I bis Regulation). A dispute in which the violation of obligations imposed by law such as anti-competitive practices is at stake is, according to the Court of Justice of the EU case law, a dispute in civil and commercial matters, and particularly in non-contractual obligations. The defendant’s court, i.e. the court of the State of his domicile pursuant to Art. 4 of the Brussels I  bis Regulation, has primary jurisdiction. The domicile of natural persons is equated with the seat of legal persons, understood as either its statutory seat, central administration or principal place of business (Arts. 4 and 63).

Notwithstanding the general criterion outlined above, the Brussels I  bis  Regulation also provides for two cases of special jurisdiction under Art. 8(1) and under Art. 7(2). According to the first, a person domiciled in a Member State may also be sued, where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. According to the second, a person domiciled in a Member State may be sued in another Member State in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.

The impact of the single economic unit’s doctrine on jurisdiction in cross-border matters is at least twofold: on the defendant and on the claimant side.

In relation to the defendant, i.e. the person brought before the court, the jurisdiction criterion under Art. 8(1) of the Brussels I  bis Regulation has been used with an instrumental purpose in the English case law related to claims for damages against violations of EU competition law deriving from cartels between companies based in several States. Indeed, in such cases, claimants sued before the English courts as defendant a company which is part of the economic unit; then, by leveraging the jurisdiction criterion under Art. 8(1), in a critical way, they also attracted the claims against the parent company based elsewhere before this  forum; the only element to be respected is the

connection between the claims so close that a unitary proceeding is appropriate. This legal reasoning/strategy, developed from the Provimi case (Provimi [2003] EWCH 961 (Comm)), is then called “Provimi point”. The assumption for the application of Art. 8(1) in the private enforcement of EU competition law of corporate groups would be the reference to the EU notion of undertaking.

In relation to the claimant, i.e. the person who files the dispute, the single economic unit’s doctrine could also play an important role. Let’s consider the possible case (MOL,  C-425/22 and see  here) of a parent company who holds a number of controlled subsidiaries which directly suffered a damage because of the anti-competitive practice of the infringer. Even if the parent company has not suffered economic losses, still could have a genuine interest in claiming the losses incurred in by its subsidiaries in order to increase its own value by the, then, increased value of the subsidiaries. As a result, the parent company would like to bring the proceeding before the courts of its registered office. Indeed, under Art. 7(2) of the Brussels I  bis Regulation it is allowed for such a  forum as long as the centre of economic and financial interest of the group of companies can be allocated to the place of the registered office. This would mean applying the single economic unit’s concept on the side of claimant: the parent company would claim for damages for the losses of the subsidiaries, which are indirect to the parent company, and insofar irrelevant (Lithunian Airlines, C-27/17 and Marinari, C-364/93), but they are at the same time direct losses of the parent company in the single economic unit perspective, and insofar relevant.

Both of these possibilities would make it feasible to ensure full effectiveness of the EU competition rules concerned bringing benefits in the litigation side, procedurally and substantively. Indeed, they favour access to justice allowing for more favourable fora, they have an impact in terms of economic capacity in litigating at home and in terms of solvency in choosing the person against whom to litigate and they circumvent the practical difficulties associated with proceedings filed and pending abroad, such as starting from the service and finally arriving to the enforcement of any judgment; furthermore, letting this choice to the affected parties increases the prospects of achieving full satisfaction of their claims for compensation. Regardless, a delicate balance between the full effectiveness of EU competition rules and, at the same time, preventing forum shopping and respecting rules and general principles under EU private international law is to be addressed to and deal with in this it seems to be an entirely internal EU law assessment.

6. Discussion

This topic can be scrutinized in a twofold perspective. The first, the most immediate one, is related to the relationship between the EU law instances for a full effectiveness of its rules and the instances coming from the civil liability under domestic private law, which requires the compliance with the principles of separate legal personality and limited liability. Hence, it follows that this tension sometimes generates rather questionable solutions, in order to take both into account. However, if we take a closer look at the topic, we are actually just referring to an example, and perhaps EU competition law is the most evident one, of the relationship among two legal orders (van Gend & Loos,  26-62): the domestic legal orders and the expanding EU legal order, autonomous and sometimes ‘strange’ to the national ones. All the problems investigated so far can be traced back to the main issue at stake: the compatibility among legal orders. The peculiarity lies in the fact that they are not separated and non-communicating with each other; rather, the best way to exchange and integrate them is to be continually fine-tuned keeping in mind the ‘rules of the game’. And moreover, the element under discussion here, legal standing, is already peculiar in itself. The standing to be sued, indeed, i.e. the identity between the one against whom the claim is brought and the one who is stated in the claim as the holder of the obligation concerned, is a classic problem of a procedural nature within the litigation, because whoever does not file a lawsuit against the person holder of the standing to be sued does not validly start a proceeding and, as a result, may risk the desired result nullified. If standing to be sued is considered in its procedural meaning, investigating the standing to be sued in the parental liability seems to be interpreting the doctrine to recognize the liability of one person for the anti-competitive practices of another person. The standing to be sued, however, actually

hides a substantial meaning. If, indeed, this procedural action is the affirmation of the existence of the underlying substantial relationship, the standing to be sued is the affirmation by the claimant that the defendant is the holder of the obligation to comply with of the legal relationship. Therefore, if standing to be sued is considered in its substantial meaning, investigating the standing to be sued in the parental liability means interpreting the undertaking’s notion as the party to whom the obligations to comply with under EU competition law are imposed. It is clear that the standing to be sued is a twofold problem: from the point of view of form, it would be a procedural problem, but, from the point of view of the content, it would be a substantial one. By bringing out the substantial soul, then, in the private enforcement of EU competition law, referring to the standing to be sued is nothing more than affirming that the person obliged to comply with the rules imposed by the EU competition law is the undertaking, and that the undertaking is a single economic unit, finally becoming a single legal entity in the specific context of EU competition law.  This is important because there is an obvious repercussion, even practical: a claimant shall argue on parental liability as soon as filing a claim. Indeed, in the preliminary assessment stage upon the conditions of the action, claimant must immediately clarify these elements in detail to the seised court which, otherwise, will have to dismiss the claim.

The key solution to address this basic problem, then, is to be found in the method. Basically, the same problems, if addressed through different methods, lead to different solutions. In the present case, then, the method to be used is starting from EU law provisions in Arts. 101-102 TFEU, deeply and correctly interpreted and taking  Directive 2014/104/EU, in confirming this rationale, as just playing the role of clarifying some (residual) aspects to the exercise of the right to claim for damages which are left to domestic law.

Private Enforcement of the DMA A Challenge for all Stakeholders involved

Miranda Cole and David Fila *

As the Digital Markets Act (DMA) became applicable on 2 May 2023, all eyes are on the putative gatekeepers, the scope of the core platform services in relation to which they are expected to be designated, and how they propose to comply with the obligations under one or more of Articles 5, 6 and 7 of the DMA from March 2024. While the European Commission (Commission) and the European Parliament have both made it clear that they expect that the DMA is likely to be enforced, at least in part, through private actions by affected business- end end-users in national courts, there is no harmonising instrument for such claims providing the necessary procedural tools (like the Damages Directive 2014/104/EU). This article outlines challenges and options for stakeholders to reconcile private enforcement and the effet utile principle, to ensure effective enforcement of the DMA.

Member State legislatures

The DMA provides few specific rules regarding private enforcement proceedings in Member States.  As a result, national law (under the principle of procedural autonomy and its limits of equivalence and effectiveness) will play an essential role in this respect. Further, as the Damages Directive 2014/104/EU and its transpositions in Member States is not applicable to private enforcement of the DMA, there is limited existing framework for national court procedures for claims under the DMA.

As a result, national legislatures are in a position to introduce a procedural framework for private enforcement, consistent with Art. 4(3) TEU (see also  Drexl et al., Max Planck Institute for Innovation and Competition Research Paper No. 23-11, paras. 65 et seq ). Member States where private enforcement of competition law has proven to be strong (including Germany, the Netherlands and Spain) are well placed to become centres for private enforcement of the DMA.

So far, Germany has emerged as a frontrunner, with the German Parliament currently debating the proposed 11th amendment of the German Competition Act (GWB) (see German Parliament, 16.05.2023,  BT-Drs. 20/6824, likely being approved in the next weeks). To facilitate private enforcement of the DMA, the proposal has four prongs: First, some of the provisions applicable to competition law private actions stemming from the Damages Directive will also apply in DMA proceedings (e.g., binding effect of Commission decisions; disclosure regime; statute of limitation); second, cartel chambers will have exclusive jurisdiction to hear DMA private enforcement actions; third, the Federal Cartel Office (BKartA) is given competence to participate in DMA private enforcement proceedings as amicus curiae (alongside the Commission with broadly similar intervention rights); fourth, the framework for cooperation between the Commission and German courts in the DMA context is elaborated upon.

At this stage, it appears that other Member States are still developing their approach to enabling, or strengthening, private enforcement of the DMA within their national law framework.

* Miranda Cole is an antitrust and competition partner in Brussels and London. David Fila is an antitrust and competition associate in Brussels.

The Commission

Beyond being solely responsible for designating gatekeepers, the Commission will play a central role in private enforcement of the DMA in several respects. At a fundamental level, its own enforcement priorities and procedures will have a significant impact on whether and when business- and end-users seek to rely on private enforcement.

First, the duration of its non-compliances procedure under Art. 29 of the DMA will have an impact on whether potential claimants will have to rely on stand-alone private enforcement actions or can rely on Commission decisions and take follow-on actions. According to Art. 29(2) of the DMA, the Commission “shall endeavour to adopt its non-compliance decision within 12 months” of opening of a proceeding against a gatekeeper. Non-compliance decisions will be binding (in private enforcement) proceedings before national courts, under Art. 39(5) of the DMA (similarly to Art. 16(1) of Regulation 1/2003). In digital markets, time is of the utmost importance for those seeking to contest a market, especially when confronted with a gatekeeper that might fail to observe its obligations under Arts. 5, 6 or 7 of the DMA. The tempo of the Commission’s non-compliance proceedings will be a significant factor in whether potential claimants take on the burden of demonstrating the infringement (in stand-alone actions), despite the deterrent of having to meet the higher burden of proof (assuming that it is not already too late, given the pace at which the markets within the scope of the DMA evolve).

Second, and relatedly, the Commission will have to – if it intends private enforcement to be a viable second DMA enforcement pillar – step up its amicus curiae function (under Art. 39(3) and (4) of the DMA). In the competition law context, the Commission seeks to limit its intervention in private enforcement before national courts to second instance proceedings. The novel nature of the DMA, the important role of the Commission as EU-wide enforcer of ex ante regulation, and the necessity for quick resolution of disputes in the rapidly evolving digital economy will require the Commission to devote more resources at earlier stages of proceedings before national courts. One of the important drivers behind the adoption of the DMA was the perception that addressing perceived market failures using competition law took too long in dynamic digital markets.

Third, the Commission needs to ensure the ‘coherent application’ of the DMA, e.g. where the scope of an obligation or requirement imposed on a gatekeeper is under dispute.

Fourth, without Commission involvement in relation to damages claims, there is scope for material divergence in approach between national courts. Article 17(3) of the Damages Directive already requires Member States to allow (at least) National Competition Authorities (NCAs) to provide guidance on the quantum of damages where requested by a national court. While not required under either the Damages Directive or national law (see e.g. for Germany, Sec. 90a GWB), it is sometimes argued that national courts should take into account the Commission’s view on the quantum of damages (see e.g.,  Rombach, in: Beck Online Commentary on Competition Law, 8th edition, Sec. 90(a) GWB para. 28). Even if the Commission does not engage on the quantum of damages, it could still provide valuable input regarding methods of calculating damages and considering passing-on.

Finally, the Commission will have to closely monitor developments in DMA-based private enforcement in Member States. Should the approach to DMA-based private enforcement diverge (especially in stand-alone cases), the risk of fragmentation may require the Commission to consider harmonizing DMA-based private enforcement through as instrument like the Damages Directive.

National Courts

National courts have the potential to play a significant role in ensuring the success of enforcement of the DMA. Once they are faced with an action based on the DMA, national courts can, through cooperation with the Commission and the Court of Justice, clearly advance implementation through actively involving the Commission in

proceedings pursuant to Art. 39(1) of the DMA, coordinating with the Commission in parallel proceedings pursuant to Art. 39(5) of the DMA, and resolving substantive questions of law using the preliminary ruling mechanism pursuant to Art. 267 TFEU. In addition, national courts can facilitate implementation by allocating cases to chambers that are experienced with private enforcement under competition law. Given the parallels between Art. 39(5) of the DMA and Art. 16(1) of Regulation 1/2003, it remains to be seen whether national courts – and in turn the Court of Justice –  considering alleged infringements of the DMA would accept commitment decisions under the DMA (e.g., pursuant to Art. 25) as prima facie evidence of an infringement of the DMA (as it did under Regulation 1/2003 in Gasorba (C-547/16)).

Business- and end-users

Business- and end-users (and their advisors) should review the potential litigation risks and upsides. The lack of clarity around how individual Member States intend to handle private enforcement of the DMA may well lead to forum shopping, where the existence of a clear framework for private enforcement will almost be a factor considered in the balancing exercise of forum selection.

In addition, Art. 42 and Recital 104 of the DMA explicitly provide for the application of the Representative Actions Directive (RAD) 2020/1828 for the benefit of consumers (i.e., end-users). While the primary focus of DMA obligations is on safeguarding rights of direct competitors and dependent business users, there is still scope for the RAD to be transposed and implemented in Member States to benefit consumers.

Conclusion

The limited provisions in the DMA itself puts responsibility for the success of private enforcement as a strong second pillar of enforcement on everyone’s shoulders. Much will turn on how serious the Commission and Member States are in enabling effective private enforcement. The Commission’s main task will be devoting sufficient resources to both timely public enforcement and amicus interventions before national courts. Member States need to consider the frameworks required under national law. In just under a year gatekeepers will need to be compliant with one or more of the provisions of Arts. 5, 6, and 7 of the DMA–time is now short.

Private Enforcement of the Foreign Subsidies Regulation

Volker Weiss and Jan Kupcik *

Regulation 2022/2560 on foreign subsidies distorting the internal market (‘FSR’) added another far-reaching enforcement instrument to the tool-box of the Commission aiming to ensure a level playing field in the internal market. Understandably, a fair chance for all participants to compete on the internal market is not only in the interest of the EU, but also in the interest of the market participants seeking a fair level playing field. It can be expected that market participants that are disadvantaged by subsidies granted to their competitors will look for avenues to ensure that the FSR is enforced to its full potential. Here, we discuss what avenues could be available to private parties.

Third parties and the Commission’s FSR proceedings

There are various ways in which third parties could seek enforcement of the FSR. First and foremost, the FSR allows for complaints. For instance, it was reported that a Belgian football club  lodged a complaint against alleged foreign subsidies distorting the professional football market in the EU. However, compared to other instruments enshrined in EU law, the FSR does not recognize third parties as official complainants, let alone does it foresee a formal complaint procedure.

To this end, there is no general right to be heard in the course of the Commission’s proceedings for third parties under the FSR or EU law. Third parties may only be subject to Commission’s measures of gathering information (being addressees of RFIs or being interviewed or even raided by the Commission). They may also express their views when the Commission invites the public after it decides to open an in-depth investigation.

Finally, third parties may also challenge Commission’s substantive decisions if they are directly and individually concerned (Plaumann, 25/62). It is difficult to foresee how this will play out under the FSR, but we have seen that with respect to other EU law instruments, such as state aid law, the jurisprudence of the CJEU grants standing to third parties under narrow circumstances only.

Plausible basis for private enforcement

It is worth noting that FSR was enacted on the basis of Art 114 and 207 TFEU, aiming at the functioning of the internal market and common commercial policy of the EU. At the outset, these goals are comparably closer to public interests than to basic standards of economic competition embodied in Art 101 and 102 TFEU (and detailed via Art 103 TFEU). It therefore comes as no surprise that there are no explicit rules on private enforcement in the FSR. Yet, prior to Directive 2014/104/EU, there were no EU rules on private enforcement of competition law either, but the CJEU made clear (see Courage and Crehan, C-453/99) that Art 101 and 102 TFEU can be also enforced by private parties. In other words, specific rules are not a precondition for private enforcement of EU law instruments.

* Volker Weiss is a Brussels-based practitioner in the field of EU law, competition law and foreign direct investment regimes.

Jan Kupcik practices law in Prague and Brussels, focusing on competition and foreign direct investments. He is the main author of the Czech commentary to the FDI Act and a co-author of a leading Czech textbook on competition law.

Generally, individuals are able to enforce EU law if the provisions in question have direct effect. If there are no specific procedural rules, as it is the case of FSR, the procedural rules for the enforcement lies in the hands of Member States, whose procedural discretion is limited by the principles of effectiveness and equivalence. Direct effect is attributed to those EU law provisions, which are clear, precise, unconditional and must not call for additional measures, either national or European (Van Gend and Loos, 26/62). As far as the direct effect of EU regulations, it was clarified that the rules can be relied on by individuals if they are relevant to their situation (Politi, 43/71).

In this light, in our opinion, the FSR, for most parts, does not seem to contain provisions that would be eligible to have direct effect. Although targeted at distortive foreign subsidies, the FSR does not prohibit them. The FSR is a brand-new instrument with no direct counterparts in EU law. However, it combines well-known concepts and tools from other EU law instruments, namely from EU merger control, competition, trade, procurement, and state aid law, which themselves, in part, have direct effect. Despite commonalities, the substantive legal test of the FSR is unique – it aims to balance negative effects of foreign subsidies in terms of distortion in the internal market against positive effects those subsidies may have on the subsidised economic activity on the internal market but also on broader positive effects in relation to relevant EU policy objectives. This substantive test – not focusing on whether the subsidies are distortive, but whether the negative effects may be counterbalanced – makes the rules of the FSR largely unsuitable for direct effect. The balancing-test is an open-ended test largely in the discretion of the Commission, preventing direct effect.

Furthermore, the FSR lacks a state-aid-like general notification obligation. Notifications are required only for specific above-threshold transactions or tenders. Foreign subsidies not meeting these thresholds are permitted (until any Commission’s decisions under their ex-officio powers to the contrary). Therefore, as a matter of principle, no general standstill obligation applies, which could be enforced by third parties, is foreseen in the FSR.

On the other hand, there is no doubt that if the thresholds under the M&A and public procurement tools of the FSR are met, the undertakings face a notification obligation. Accordingly, there is a standstill obligation for the concentration that are required to be notified to the Commission, and for awards of the contracts in above-thresholds tenders. As known from  Canon (T-609/19), notification and standstill obligations stand beside each other. They are also sufficiently clear to establish direct effect, meaning that third parties should be able to rely on them in private claims (if the obligations in the specific situation are relevant to them – see Sauman, C-354/90).

Additionally, if the Commission issues a decision under FSR, the addressees are (unsurprisingly) obligated to act in compliance with it. A breach of this obligation, in principle, can be enforced also privately by a third party. This also extends to interim measures imposed by the Commission according to Art 12 FSR.

Types of remedies

The remedies available in private enforcement are, generally, limited by what national law allows. The national procedural autonomy is, of course, subject to the principles of equivalence and effectiveness. National law should not make it practically impossible or excessively difficult to exercise the rights which third parties can have under EU law (Kone and Others, C-557/12). In the field of state aid effectiveness has been interpreted as requiring national courts to provide protection against state aid which was unlawfully granted even to the point of recovery unless there is a decision by the Commission declaring compatibility in the meantime (C-39/94 SFEI, C-199/06 CELF).

Taking the example of private enforcement of EU competition law, we assume that claims for cease-and-desist orders (in particular if breaches of standstill obligations are argued) or claims for specific performance (forcing the defendant to e.g., notify a notifiable concentration) will be pursued in practice. Claims requiring restitution, either following a breach of a standstill obligation or requiring returning the financial contribution of third countries, can be

also brought. Finally, requests for preliminary injunctions can also become an option for third parties being disadvantaged by distortive foreign subsidies (which are subject to a negative decision of the Commission or appear in context of breaching notification or standstill obligation, even connected to interim measures).

Conclusion: enforcement rules

From both substantive and procedural perspective, there is little guidance for FSR private enforcement. It is a reminiscence of the situation with respect to EU competition rules before Courage and Crehan. On the other hand, lessons from private enforcement of EU competition law can be transposed to private enforcement of FSR, as long as they are not exclusively based on the Damages Directive. The governing principles clearly will be the principles of equivalence and effectiveness.

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