EU & Competition

Influence of a Directive on Damages Actions on the Croatian Legal Regime

Will the implementation of the Directive on Antitrust Damages Actions spur further progress on Croatian private enforcement?

Elements of private enforcement in Croatian law

The most recent amendments to the Croatian Competition Act (Act), which entered into force on 1 July 2013, have brought the long-anticipated first breath of systematic regulation of private enforcement. The amendments, primarily contained in Article 69a of the Act, are expected, with good reason, to provide initial impetus in procedures before Croatian courts to all parties that have suffered harm.1

Proposal for a directive2

Simultaneously with the adoption of the amendments to the Act, at the EU level, a process of alignment of regulations on damages actions for infringements of competition law was under way (and is still ongoing) as the EU Commission adopted a proposal for a directive on damages actions for infringements of the competition law provisions (Directive).

Regardless of the different expert views on the adoption of the Directive, its effects are far reaching and it leaves a number of open issues on implementation within the Croatian legal framework. Therefore, it is a pity that the proposal for the Directive was not considered more seriously in connection with the adoption of the amendments to the Act.

Issues regulated by the Directive

The Directive represents an attempt to align the procedural regulations of the member states with regard to (i) the disclosure of evidence in compliance with the principles of proportionality and protection of confidential information, as well as with regard to access to case files of the competition authorities; (ii) provisions that set the minimum limitation period; (iii) joint liability of offenders for suffered harm, with certain exceptions; (iv) detailed rules on the passing of overcharges and quantification of harm, and (vi) consensual dispute resolution.

Implications of the Directive

Interestingly, within the Croatian procedural rules (whether in the Act or the Civil Procedure Act), there are already solutions that (at least partly) comply with the requirements of the Directive. On the other hand, the implementation will certainly have to be carefully planned, given that the requirements of the Directive affect some of the institutions that are easily understandable and have been confirmed in detail by case law.

An example of the solution already known in the Croatian legal regime

The Directive stipulates the right to claim full compensation for the suffered harm, which includes compensation for actual loss and for loss of profit3, and interest. Such solution is already fully accepted as a standard in the Croatian law.

Furthermore, the Directive envisages the binding effect of final decisions of national competition authorities or by reviewing courts, meaning that the courts cannot take decisions running counter to agreements, decisions, or practices that are already the subjects of a final infringement decision.

However, the amendments to the Act provided that the court when deciding on damage action shall take particularly into account the final decision of the Competition Agency or EU Commission. Thus, the amendments to the Act do not stipulate that the court is bound by the final decision of the Agency, which will eventually be corrected, in our opinion, via a stabile body of case law on the preliminary questions. Pursuant to court practice, the court is bound by a final administrative act within the boundaries of finality on the existence of certain rights or legal relationships.4

Possible additional interventions in procedural rules

It should be pointed out that the rules of civil procedure regulate gradual and manifestation lawsuits governed by article 186b of the Civil Procedure Act and that might to some extent meet the requirements set by the Directive on disclosure of evidence.5 But the provisions regarding the manner, the classification of documents, and when those documents may be disclosed will have to be adopted separately. The Directive clearly defines that national courts, for example, cannot order a party or a third party to disclose leniency corporate statements or settlement submissions. In this sense, additional restrictions, or a completely new institution, will have to be introduced to answer to the requirements of the Directive.

In addition, the manner in which the statute of limitation is recognised by the Directive is something that will have to be carefully implemented into the system, since it represents a novelty for damages actions, where the subjective deadline of the statute of limitations would be extended from three to five years.

Also, although it is reasonable to conclude that courts would take the same stand as the Directive (undertakings that have infringed competition law through joint behaviour are jointly and severally liable for the damage caused by the infringement), an intervention will be necessary and measures will have to be implemented to at least protect the leniency applicant.6

A proposal for a Directive on damages actions for breaches of EU Competition law, if adopted in its present form, will have an immense impact on civil procedure in that the actions for damages for competition law infringements will be treated separately from the general process institutions.

According to available information, the implementation of this instrument of enforcement has not been confirmed yet in procedures before Croatian courts.
Directive 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.
The directive, however, only acknowledges established EU case law (eg, Joined Cases C‑295/04 to C‑298/04 Manfredi and Others).
Thus, a contrario civil court may only decide on the preliminary issue outside the boundaries of final administrative act (or decision of the review court); eg, ruling of the High Commercial Court of the Republic of Croatia (Visoki trgovački sud Republike Hrvatske), case no. Pž-2871/01 of 3 June 2003.
Elements of rules on submission of documents in the possession of the other party, as prescribed by Article 233 of the Civil Procedure Act, may also be used.
Article 11 para 2 of the Directive prescribes that an undertaking granted immunity from fines by a competition authority under a leniency programme is liable to injured parties other than its direct or indirect purchasers or providers only when such injured parties show that they are unable to obtain full compensation from the other undertakings involved in the same competition law infringement.