Insight: “AG Rantos' Opinion In Volvo And DAF Trucks - EU Law Live

The facts of the pending Volvo and DAF Trucks case (C-267/20) are simple and straightforward, but the legal issues that this case poses are of great importance for the exercise of actions for damages for competition infringements under the Competition Damages Directive (Directive 2014/104/EU).

The legal issue in the case at hand revolves around the temporal scope of application of the Directive,  a matter of key relevance insofar as this legal instrument has shaken up the competition world with its extensive use as a private enforcement tool for curbing anticompetitive behaviours. The administrative sanctions imposed by competition authorities are a significant detriment for companies acting in breach of Article 101 TFEU. However, the long and costly private litigation that follows after could be considered an even stronger negative consequence for infringing companies engaging in anticompetitive conducts. As such, every case that further clarifies the rules on the application of the Directive adds to making this tool more comprehensible and effective.

This Insight focuses on the arguments of Advocate General (AG) Rantos in his Opinion of 28 October 2021 in Volvo and DAF Trucks and the potential implications of his findings for the private enforcement realm in domestic courts.

Background

The well-known case of the Spanish truck cartel is at the origin of the dispute before the referring court (the Provincial Court of Leon, Spain). The moment at which the relevant events happened is key to the analysis of this case, hence why the background places a special focus on the dates in question.

The European Commission found that from 1997 until 2011 various truck manufacturers concerted practices on gross prices and on passing on the costs of compliance with stricter emission rules. On 9 July 2016, the Commission adopted a decision fining a number of truck manufacturers (MAN, Volvo/Renault, Daimler, Iveco and DAF) for participating in the trucks cartel (AT.39824 – Trucks). The press release was published on the same day. The Summary Decision was published in the Official Journal of the EU on 6 April 2017.

On 18 April 2018 a purchaser, who had acquired trucks from AB Volvo and DAF Trucks during 2006 and 2007, brought an action for damages before a court in Spain, seeking compensation for the harm suffered as a result of the cartel. The victim based its action on the Competition Damages Directive, which had been transposed into the Spanish law on 26 May 2017 (failing to meet the deadline, as in most of the Member States, of 27 December 2016). Even though the defendants challenged the applicability of the Directive, the first-instance court applied it to the case at hand and consequently ordered the defendants to compensate the victim for 15% of the purchase price of the trucks.

In this context, the Court of Justice was asked by the referring court to rule on the scope ratione temporis of certain provisions of the Directive and, in particular, to determine whether Article 10 laying out the limitation period of five years and Article 17, divided into the national courts’ ability to assess the amount of damage (Article 17(1)) and the rebuttable presumption of harm caused by cartels (Article 17(2)), are to be considered substantive provisions, which cannot apply retroactively to ‘situations existing’ before the entry into force of the Directive, or rather procedural provisions, which are amenable of retroactive application.

Opinion of AG Rantos on the temporal scope of the Directive

Article 22 of the Directive states that substantive provisions of the Directive shall not apply retroactively, giving no guidance as to what those substantive provisions are, nor which point of time is to be taken into account to determine the moment of the retroactivity.

To fill in these gaps, AG Rantos rightfully notes in his Opinion that, in order to ensure the uniform application of EU rules, protect legal certainty and avoid forum shopping, the definition of these concepts should be considered at the EU level, something that was challenged by the Spanish and Estonian governments interfering in the case . Even if the Directive allows for a certain margin of procedural autonomy in its application, a uniform European definition is nevertheless desirable, especially taking into account that the proposal for the Directive already acknowledged that the main obstacle for the effective compensation to antitrust victims has traditionally been the wide diversity of national legal rules governing antitrust damages.

‘Situations existing’ before the entry into force of the Directive

Regarding the temporary point of reference for retroactivity, the AG notes that the substantive provisions shall not apply to ‘situations existing’ before their entry into force, this point of reference being the date of the infraction, rather than the adoption of the infringement decision. In his view, the actions for damages must be governed by the substantive provisions in force at the time when the infringement was committed (1997 to 2011 in the case at hand).

It is interesting to note that even if the infringement itself undoubtedly happened before the entry to force of the Directive, the moment of the sanction opens a narrow window for potential debate. Even if the sanction was imposed by the Commission before the entry into force of the Directive, the binding Summary Decision declaring such penalty and affecting the legal position of the truck manufacturers was published more than three months after the expiry of the transposition period of the Directive. The lack of direct horizontal application of the Directive to the proceedings is not put into question, however, if it is to be considered, contrary to AG Rantos’ Opinion, that the ‘situation existing’ encompasses also the publication of the infringement decision, there might be an obligation on the national court to interpret EU law in a manner consistent with the Directive and indirectly extend the application of its substantive provisions to the case at hand raising further interpretative questions (Adeneler). In any case, this issue, even if relevant for a general EU law debate, is left out of the scope of the case and hence, this analysis.  

Limitation period (Article 10) – substantive provision

AG Rantos pointed out that the Court of Justice has already established in its jurisprudence (Evropaïki Dynamiki v Commission) that, unlike procedural time-limits, the limitation period is linked to substantive law since it affects the enforceability of a subjective right, which, if time-barred, may no longer be effectively asserted before the courts. The limitation period also has a function to protect both the person who has been injured and the person liable for the damage by preventing delays in the exercise of victims’ rights. As such, given that the action for damages brought in this case concerns facts occurring and penalties imposed before the Directive entered into force in Spain, the five-year limitation period cannot apply.

The substantive nature of the limitation period has been a subject of debate, some scholars arguing that the wording of Article 10, in fact, refers to limitation periods in relation to the initiation of a civil proceeding and not to the underlying substantive claim to compensation (Kersting and Preuß, para 342), with couple Member States also classifying it under different rules (for example, Austria classifies limitation periods as procedural rules). And while the conclusion of the substantive nature of Article 10 at the EU level is far from questionable, it should not be misconceived that one uniform approach exists in all jurisdictions leading to a simple and straightforward answer.

Assessment of damage (Article 17(1)) – procedural provision

Article 17(1) of the Directive concerns the standards of proof necessary for the purposes of quantifying the harm suffered by the injured party and the assessment, by the national court concerned, of the evidence on which the plaintiff may rely in order to establish the extent of that damage. The aim of this provision, according to AG Rantos, is to ensure that neither the burden of proof nor the standard of proof necessary for the quantification of the harm makes it practically impossible or excessively difficult to exercise the right to compensation. In his view, therefore, the tool merely reinforces the task of the judge to determine the amount of the damage suffered in cases where it is impossible or excessively difficult for the claimant to do so, classifying it as a procedural provision that can apply retroactively to the case at hand. AG Rantos also underlines that Article 17(1), in contrast with Article 17(2), does not alter the burden of proof or the general obligation that weighs on the claimant to prove the existence and the quantification of the damage.

Rebuttable presumption of harm (Article 17(2)) – substantive provision

On the other hand, Article 17(2) does remove the burden of proof and the primary obligation on the plaintiff to quantify and prove the harm suffered, establishing a iuris tantum presumption that cartels cause harm. While acknowledging that rules on the distribution of the burden of proof are procedural in nature, AG noted that a rebuttable presumption of harm, directly related to the non-contractual liability that affects a legal position of the infringer, is part of substantive law and cannot apply to the case at hand.

However, such a conclusion does not prevent national courts from applying previously existing rules related to the burden of proof as to the occurrence of harm, which must be interpreted in light of the general principles of equivalence and effectiveness. In light of the judgment in Masterfoods and HB, which established that national courts may not adopt judgments that are incompatible with the Commission’s decision on competition law infringements, the causal link between the infringement (already established by the Commission’s decision) and the harm suffered could be more easily recognized by the national court without having to resort to a retroactive application of Article 17(2).

The same result via a different route?

Although the substantive provisions of the Directive were considered not applicable to the case at hand, national courts are still obliged to interpret EU law in light of the mentioned general principles of equivalence (national rules can be no less favourable than those relating to similar domestic remedies) and effectiveness (the exercise of the rights conferred by EU law shall not be practically impossible or excessively difficult).

Under the Spanish Civil Code, an action for damages can be brought within a one-year limitation period. In order to determine whether this limitation period respects the said two principles, it must be first established which act triggers the beginning of the limitation period. Is it when the infringement was seized, when the damage was materialized (the moment trucks were purchased), when the Commission sanctioned the companies, or maybe the moment when the action was exercised? These alternative answers involve varying consequences for the action to be considered time-barred.

The AG Opinion concludes that the short answer, considering Article 101 TFEU and the principle of effectiveness, is that the limitation period starts when the victim is able to identify the main elements needed to bring an action for damages, namely (i) the unlawful behaviour, (ii) the harm, and (iii) the identity of the infringer.

In such a way, the date of the infringement or the purchase can be quickly disregarded as not meeting the criteria. Neither would it make sense, in the author’s opinion, to allow the period to start running from the moment the action is exercised, as sustained by the victim in this case, because in such a situation the purpose of having a limitation period would be defeated by the sole fact that the victim could bring an action at any point in time after the infringement is found, subjecting the limitation period on the will of one party and completely disregarding the principle of legal certainty.  

Therefore, the only reasonable option, according to the Opinion of AG Rantos, is to consider the time at which the infringement decision was made as the relevant factual moment. However, the question arises once again: Which moment of the infringement decision is relevant? Is it the press release or the publication of the Summary Decision or maybe even later?

According to AG Rantos, and in line with the practice of Spanish national courts, the limitation period begins to run from the date of publication of the summary of the Commission Decision in the Official Journal of the EU (6 April 2017 in the case at hand). The reasons why the press release shall not be considered a reference for the limitation period are convincing – the non-binding nature of a press release, lack of detailed information on the identification of the parties or conducts, limitation in language translation, etc. A less convincing part of the argument for dismissing press releases as a relevant temporal point is the assertion that victims of anticompetitive practices do not have a duty of due diligence consisting of monitoring the publication of press releases. This is because regardless of how one may call it, monitoring press releases or monitoring publications of summary decisions on the Official Journal seems to require a similar level of diligence on the victim’s part. 

As a last and relevant point made by AG Rantos, one could just additionally wonder whether the delay between a more general press release and a more detailed (if any) summary decision is justifiable and does not indirectly extend the limitation period, giving the victims more time to prepare their defence strategy against the cartelists. However, if read in light of the objectives of competition law, this delay may be considered in any case a negligent issue for the overall purpose of the competition law regime.

As an overall result, following the reasoning of AG Rantos, the private action brought by the victim in the case at hand was saved from being time-barred just by 4 days (exercised on 1 April 2018) and thus fell within the one-year Spanish limitation period.

Whether the Court of Justice finds the Directive and its provisions in question to be applicable to the case at hand seems to lead to the same ultimate result in this particular case. However, rejecting the application of Article 10 could time-bar and thus have great consequences to all those other actions pending before Spanish courts that were brought after 5 April 2018 and whose limitation period was not interrupted with prior procedural acts. Now, it is for the Court of Justice to take the final stance. 

Emilija Berzanskaite is a Legal Reporter at EU Law Live.