Regulation (EC) 1/2003, the modernization regulation, provides detailed procedures on the enforcement of EU competition law contained in articles 101 and 102 TFEU. The Regulation omits to provide for the private enforcement of European competition law, which are, however, an effective and necessary means to ensure compliance with articles 101 and 102 TFEU. This gap has now been filled by the enactment of Directive 2014/104/EU on actions for damages under national law for infringements of the competition law (the "Directive").
One of the most effective procedural tools provided for on a procedural level is contained in article 5 and 6 of the Directive which provide for the disclosure of evidence by both the defendant, third parties and competition authorities. These measures are introduced as a remedy for the asymmetrical distribution of evidence typical for cases involving violations of competition law. In practice, a claimant who has been adversely affected by a cartel (or another violation of competition law), e.g. by having paid a price for a product higher than necessary, may well become aware of the existence of the cartel but may be in a difficult position to access any evidence to establish a case. This may even be true if the cartel has been investigated by competition authorities, which have collected evidence, but then decided not to continue the investigation, e.g. in cases of leniency decisions of the Commission. One of the Directive's purposes is to ensure that this asymmetrical access to evidence does not prevent the private enforcement of competition law.
Article 5 of the Directive provides that member states are to ensure that courts are able to order both the defendant and third parties, in practice often other members of a cartel, to disclose evidence which lies in their control, to the claimant. The claimant has merely to present to the court "a reasoned justification containing reasonably available facts and evidence sufficient to support the plausibility of its claim for damages". The Directive does not provide further guidance on these terms. Due to the obvious similarities of the requirements set out in article 5 of the Directive and US federal procedural law, it is helpful to turn to the latter for guidance. US law was at least considered during the drafting of the Directive in this context, though the final materials do not include references.1
The requirement of presenting a plausible claim for a violation of competition law to the court in a first step of the proceedings followed by the disclosure of evidence is a requirement last discussed in greater detail by the US Supreme Court in Twombly in 2007.2 In that case the claimant had merely alleged the parallel conduct of several market participants in a case which required him to eventually show a conspiracy under § 1 of the Sherman Act. The court held that the pleaded facts were insufficient as the claimant had not in any way presented a plausible case that the parallel behaviour was the result of a conspiracy. Hence, so the Supreme Court, "antitrust conspiracy was not suggested by the facts adduced" and hence, "plaintiffs here have not nudged their claims across the line from conceivable to plausible".3 Hence, for a claim not to be dismissed, the claimant must at least allege facts, which, if true, would support its case. Under the Directive, the claimant must further present reasonably available evidence. Hence, mere allegations of facts, which are not backed at least by such evidence which would support the plausibility of the case, even if it would not be sufficient to actually support the claim in trial, will likely be insufficient.
Under Article 6, a court can also order competition authorities (i.e. both national authorities and the Commission) to disclose evidence in their files. This application does not require the submission of a plausible claim to the court, but the claimant must show under Article 6(10) that it could not reasonably obtain the evidence from the defendant or a third party.
The provisions of the Directive will have significant impact on arbitration. While the Directive itself only refers to "national courts" and the ECJ has repeatedly held that arbitral tribunal cannot be equated with national courts,4 the Directive also states that articles 101 and 102 TFEU are "a matter of public policy and should be applied effectively throughout the Union in order to ensure that competition in the internal market is not distorted."5 There can therefore be no doubt that the private enforcement of competition law is a matter of public policy and the provisions of the Directive are the means to ensure the enforcement of that public policy. Hence, also arbitral tribunals cannot ignore the provisions of the Directive in evidentiary proceedings.
The IBA Rules on the Taking of Evidence grant the tribunal broad discretion to order the parties of the arbitration to produce documents. Hence, the Arbitral Tribunal already under its existing powers can comply with the Directive even before its provisions are implemented. The implementation of the Directive will require that any national law applicable to arbitration, which would curtail such powers, is amended. Further, due to the public policy character of the Directive, it also seems likely that an agreement of the party (e.g. made in the arbitration agreement), would be void.
The nature of the Directive narrows the discretion of the Arbitral Tribunal to order the production of documents. As the private enforcement of competition law is a matter of European public policy and articles 5 and 6 are the means to this end, an arbitral tribunal is obliged, by sanction of the setting aside of its award, to order the defendant to produce documents requested by the claimant if the latter has presented a plausible case.
The powers of the tribunal, however, are limited to ordering the production by the defendant, not by third parties and competition authorities. In order to implement the provisions of the Directive in this regard, the tribunal will have to ask the courts at the seat of the arbitration for legal assistance in either requesting the documents from competition authorities or coercing third parties to produce the requested documents.
This may in practice also be the step to be taken when the defendant refuses to comply with an order of the tribunal. Under article 9(6) of the IBA Rules, the tribunal may draw adverse inferences from a party's refusal to produce documents. In particular in competition law cases involving the typical asymmetry of evidence, this may prove not to be a viable option as neither the claimant nor the tribunal may have sufficient knowledge of the facts to draw adverse inferences.
Hence, the Directive will prove to have a significant impact of evidentiary proceedings in arbitration and will ensure that private enforcement of claims for damages based on violations of competition law is not restricted to proceedings before national courts but can also be exercised in arbitration.
- Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios, Final Report for the European Commission, 21 December 2007, pages 50ss.
- Bell Atlantic Corp et al v. Twombly et al. 127 S. Ct. 1955 (2007).
- C-555/13 Merck Canada Inc. vs. Accord Healthcare Ltd and others., Order of 13 February 2014; C-102/81 “Nordsee” Deutsche Hochseefischerei GmbH vs. Reederei Mond Hochseefischerei Nordstern AG & Co. KG and others., Judgment 23 March 1982.
- Recital (1).