Archivo de la etiqueta: Cartels

Damages Directive, Case Akzo Nobel v EC & CDC, and the end of the Leniency Program ¿?

Since the publication of the Damages Directive to be implemented in 2016, we see how the discussion in favor of more extended Decisions of the EC to ease things for possible claimants of damages in their applications before the Courts of the Union raises.

First will see how we can infer from the text of the Directive that the Leniency Program could be seriously hampered. Then we will see that change of posture of the EC regarding the publication of file information in two cases related with the Hydrogen Peroxide Cartel. Is not a coincidence that in both cases the CDC was involved, this is the association of claimants represented by T. Funke.

After reading the text of the Damages Directive we can see how despite the fact of protecting the Leniency Program participants information, regardless admitting the access to the file during the process itself, paragraphs (26) and (38), and articles 5.6 and 6.6 protect information and documents submitted during the leniency proves (which in practice is in doubt in Case Akzo Nobel), in practice, at the time of paying damages, this protection drops, at least from the economic point of view.

Looking close to article 11 we already see how an SME, that has not led or coerced the cartel, is only responsible for the damages caused directly to its suppliers and users (this has consequences we’ll see). Then in paragraph 4 a) of the same article, although protecting also the leniency applicants, this protection falls in point b) of the same paragraph.

Article 11.4 b): “to other injured parties only where full compensation cannot be obtained from the other undertakings that were involved in the same infringement of competition law.” Emphasis added.

The Directive puts the charge of paying to the leniency applicant, if the other parties in the cartel are not solvent, and, if we add the article if the SMEs, we see how the applicant will end up paying.

Besides that, we have to take into account that later on, when talking about ADR, the leniency applicant will not be safe yet, because in article 19.3, it says that if the other undertakings cannot pay, although, cautious and proactive, the applicant again, has to bear the unpaid amounts, this is because the full compensation right that cartel victims have in the directive.

One could say, well, it is only bad from the economic perspective; at least they do not get my business information, but no…

Because the 28th of January, Case T-345/2012 Akzo Nobel v CE y CDC has been made public, there, the EC changes its posture, maybe because the good arts of Mr. Funke (open to speculation), on the access to documents submitted in a leniency procedure, after a very nice article of Leo Szolnoki in GCR I took a deep look at the decision of the General Court.

But first, we have to bear in mind that in 2011 the EC was on the other side of the street, in Case CDC v European Commission (T. Funke representing CDC, also related to the Hydrogen Peroxide Cartel), there the EC said that CDC access to the files can hamper the success of the Leniency Program, and Luxembourg said that CDC was right, that the damages claimants cannot exercise their right of compensation  if they do not have access to the file (paraphrasing the case off course).

Getting back to the case of past January, we see at the doorstep of the implementation of the Damages Directive, how the General Court is starting to assume a posture regarding access to documents within the leniency program and its publicity.

Spite the fact that the lawyers of Akzo Nobel wielded the same arguments that the EC used in CDC c European Commission, that the access to the files could put in danger the program itself, the GC has made it clear, one of the consequences of the participation in a cartel is that you have to pay for the damages you caused, even if you are the one snitching your partners, that that is not sufficient to impede the publicity of an extended version of a Decision, to say that, I would be an easy target for claimants, and finally, that in this case, Akzo could not proof that the information voluntary submitted was business secrets or confidential (see paragraphs 81 and 82).

Thus, and as a conclusion, among the possible “damages” to pay while paying damages, even been proactive and negotiating via ADR, plus the change of posture of the EC and the GC, regarding information voluntarily submitted within a leniency process, just in the case of an “Italian torpedo”, I do not think that many undertakings would like to denounce its buddies in a cartel. Maybe just until we can see clear examples of the implementation of the new directive in national and EU courts.

Let’s think in a company like Recticel, the mayor producer of foam in many countries, which incentivized the cartel itself, then dismantle it by leniency applications all over the EU and US, in the future set of circumstances, could not apply.

This is because on one side you have the GC revealing my “secrets” to my competitors, and on the other side applying the Damages Directive, me been the more solvent, taking into account all afore commented, certainly I would be the one paying in all jurisdictions.

We shall see how jurisprudence evolves when the Directive enters into force.

By: J. Nicolás Otegui Nieto