03/07/2015

Private Enforcement of Competition Law under Revision in Finland – Working Group Published Report Proposing New Legislation

A working group appointed by the Ministry of Employment and the Economy has published a report on 16 June 2015 proposing amendments to the provisions governing actions for damages under competition law in Finland (report available only in Finnish). The report was drafted into the form of a government proposal. The report proposes an entirely new act on actions for damages on the basis of an infringement of competition law. The proposal is based on the EU directive on antitrust damages actions, which must be implemented nationally no later than on 27 December 2016. 

The aim of the Directive and the subsequent national law is, among other things, to ease the raising of claims for damages and to develop the proceedings in such a way that those suffering from infringements of competition law could be fully compensated for the damage.

The proposed act will make the legislative environment more favourable for the claimants in competition law private enforcement in Finland. It can be expected that with the entry into force of this act, the number of damages actions under competition law will continue to increase.

To a large degree, the new act would contain provisions on minimum requirements under the Directive that are already now implemented in the Finnish national law. However, the Directive requires the enactment of certain provisions that to date are not included in the Finnish law. The report proposes that the following provisions be implemented into the new act on actions for damages on the basis of an infringement of competition law:

  • Presumption of harm. Currently, it is the plaintiff's duty to prove the damage caused by the restriction of competition. In the proposal, the burden of proof is reversed with respect to cartels; a cartel is expected to have caused damage, unless otherwise proven by the party to the infringement. However, a percentage-based presumption of the quantum of damage is not proposed to be included in the act; instead, the claimant should prove the quantum of damage. Furthermore, the presumption of harm would only apply to cartels. For example, in cases concerning the abuse of a dominant position and vertical restraints, the burden of proof would remain unaffected.
  • Burden of proof for passing on overcharges. The report proposes detailed regulation for situations in which a customer of an infringer has passed on the overcharge to its own customers. The burden of proof the overcharge being passed on would rest with the defendant. The act would also provide for criteria to be met by an indirect purchaser for proving that overcharge has been passed on to it.
  • Impact of leniency on limitation of joint and several liability and recourse liability. Currently, leniency does not have any relevance for liability for damages. According to the proposal, an immunity recipient would only be liable for damage caused by a restriction of competition to its direct or indirect purchasers or providers. The immunity recipient should remain fully liable to other injured parties only where they are unable to obtain full compensation from the other infringers.

 

The position of an immunity recipient would also be more favourable in comparison to the other parties to an infringement with respect to recourse liability. As a rule, the damages payable should be allocated to those liable in view of the level of guilt of the party concerned. The amount of damages payable by the party that has been granted immunity from fines under a leniency programme may not, however, exceed the amount of the damage it caused to its own direct or indirect purchasers or providers.

  • The impact of settlement on actions for damages. The report proposes that the share of damages payable by a party to a settlement agreement could be bindingly agreed in said agreement. This would be of particular relevance in circumstances where some of the infringing parties would refuse to participate in settlement. In such a situation, the remaining parties, among other things, who are liable to pay damages would not have a right of recourse towards a party who has participated in the settlement agreement. The aim of the proposed provisions is to promote consensual settlements.
  • Limitations of joint and several liability of small and medium-sized enterprises. In accordance with the Directive, small or medium-sized enterprises (SMEs) as defined in Commission Recommendation 2003/361/EC (8) are not jointly and severally liable for damages caused by an infringement of competition law. However, a further condition is, among other things, that the company's market share in all relevant markets is below 5%. In practice, this is likely to mean that the limitation of the joint and several liability of SMEs may not be of particular relevance in Finland. 
  • Period for which interest is paid. According to the working group report, the ECB reference interest rate should be payable on the capital amount of damages from the occurrence of damage until the commencement of the obligation to pay default interest. The damage would be deemed to have been caused no later than on the day when the infringement ceases. However, the claimant can prove that the damage occurred before said date.
  • Impact of an infringement decision on damages court proceedings. Currently, a decision concerning an infringement of competition law issued in an administrative procedure is not binding on civil courts that are handling the related damages actions. According to the proposal, a binding decision issued by the Finnish Competition and Consumer Authority, the Market Court or the Supreme Administrative Court would have a binding effect. However, such a decision would not be evidence as regards the quantum of damages but only as regards the existence of infringement. Decisions issued by national competition authorities or courts of other countries would not have such a binding effect.
  • Limitation period. According to the Directive, Member States must ensure that the limitation periods for bringing actions for damages are at least five years from the date when the infringement is terminated and before a claimant becomes aware, or can reasonably be expected to become aware, that damage has occurred. The Directive also provides that the limitation period should be suspended or interrupted for the duration of the investigation by the competition authorities and continue at the earliest after one year has elapsed from the issuance of the binding decision. In addition to the statute of limitations, the report proposes that the aforementioned limitation period of five years should be interrupted within 10 years from the end of the infringement.

 

The report proposes economic succession for damage liability, although this issue is not required or even discussed in the Directive. In the report, economic succession refers to a situation, such as a transfer of business, in which the purchaser is also obligated to pay any damage caused by the target of the acquisition in the period preceding the transaction, if the purchaser was aware or should have been aware about the infringement. At least to date, corresponding legislation or case law is non-existent in other EU Member States.

On the other hand, the report does not propose that certain issues allowed under the Directive should be implemented into national law. For example, the reduction of fines due to a settlement is not proposed to be implemented into Finnish law, although this would be possible under the Directive.

It is still possible to influence the contents of the new provisions before the matter is referred to the Finnish Parliament. Comments may be submitted to the Ministry of Employment and the Economy by 11 September 2015. We are pleased to discuss the practical implications of the proposal for your company.

 

For further information, please contact:
Sari Hiltunen
Mikko Huimala
Salla Mäntykangas-Saarinen