FOLLOW-ON ACTIONS – Clarification on the binding effect of final decisions by competition authorities before national courts when the Damages Directive is not applicable

In a judgment dated April 20, 2023, aff. C-25/21, the Court of Justice of the European Union (hereinafter “CJEU”) ruled on the binding effect of final decisions by national competition authorities, when implementing consecutive private actions (“follow-on actions”), when these do not fall within the scope of the “Damages Directive”. To ensure a high evidential value, the CJEU requires that “the nature of the alleged infringement which is the subject of those actions, as well as its material, personal, temporal and territorial scope, coincide with those of the infringement found in that decision”.

In this case, the oil company Repsol has been condemned twice by the Spanish competition authorities, based on Article 101 of the TFEU and Spanish national law. The first decision was rendered in 2001 by the Spanish Competition Court and confirmed in 2007 by a ruling of the Spanish Supreme Court. The second decision was rendered in 2009 and confirmed in 2015. In both rulings, the company was accused of indirectly fixing the retail price of fuel through its contractual relations with certain Spanish service stations.

As a result, the owners of a service station, who had signed exclusive fuel supply contracts from 1987 to 2009, brought an action for annulment of the contracts concluded with Repsol, and a claim for damages to compensate for the harm allegedly caused. In order to demonstrate the existence of the infringement in question, the plaintiffs rely on the 2001 and 2009 decisions.

The referring court hearing the case states that, under Article 2 of Regulation 1/2003, the burden of proving an infringement of the TFEU lies with the party alleging it. It goes on to state that, according to national case law, no binding effect is conferred on a final decision of a national competition authority. Unless it can be shown that the infringement contested in that decision and the one which is the subject of the follow-on action are the same, and provided that the claimant has indeed been the victim of that infringement.

However, the referring court considers that “to deny any binding effect to the final decisions of the national competition authority would have the effect of maintaining in force contracts which infringe Article 101 of the TFEU.” It therefore decided to stay proceedings and refer two questions to the CJEU for a preliminary ruling.

The first question concerns the evidential value of decisions by the national competition authority, in the event that the contractual relationship at issue in the follow-on action falls within the same scope as the national authority’s decision. In such a case, is it possible to consider that proof of the anti-competitive practice has been established, with the burden of proof shifting to the defendant to prove otherwise.

Firstly, the CJEU looks at the temporal and material applicability of article 9 paragraph 1 of Directive 2014/104/EU entitled the “Damages Directive”. This article provides that “an infringement of competition law found by a final decision of a national competition authority or by a review court is deemed to be irrefutably established for the purposes of an action for damages brought before their national courts under Article 101 or 102 of the TFEU or under national competition law”. 

Two points are addressed by the CJEU concerning the scope of application of the “Damages Directive”. Firstly, with regard to its material scope, the Directive applies to actions for damages only. Consequently, no action for nullity can be brought on this basis.  Secondly, regarding the temporal scope, the CJEU points out that it must be established whether the provision concerned is substantive or procedural (judgment of June 22, 2022, Volvo and DAF Trucks, C267/20‑, EU:C:2022:494, paragraph 38).  In the first case, the provision would apply to events occurring after December 27, 2016, the date on which the transposition period left to the Member States expires. In the second case, the provision would apply to proceedings initiated as from December 26, 2014 (judgment of June 3, 2021, Jumbocarry Trading, C39/20‑, EU:C:2021:435, point 28).

Unsurprisingly, the Court points out that Article 9(1) of the Directive relates to the existence of one of the constituent elements of civil liability and is therefore of a substantive nature. Consequently, Article 9(1) cannot be applied in the present case to actions for damages brought following decisions by national competition authorities.  These actions became final before the expiry of the maximum transposition period.

It is therefore necessary to look at the national regulations interpreted by the national courts, in the light of Article 2 of Regulation 1/2003. The CJEU goes on to stress the importance of the principle of effectiveness. According to this principle, national rules must not “make in practice impossible or excessively difficult to exercise rights conferred by EU law.”

In this case, the CJEU considers that the Spanish national rules, insofar as they lead to a total absence of probative effect of the final decisions of the competition authorities, render “the exercise of the right to compensation for infringements of Article 101 of the TFEU excessively difficult.” The Court explains that competition law cases require “a complex factual and economic analysis”.

Thus, the Court points out that in such cases, it is important to guarantee the full effectiveness of Articles 101 and 102 of the TFEU. It is therefore necessary to consider that the finding of an infringement of competition law by a decision of the national competition authority establishes the existence of that infringement, until proof to the contrary is adduced. To this end, it specifies that the nature of the infringement mentioned in the follow-on action, “as well as its material, personal, temporal and territorial scope,” must correspond to those of the infringement found in that decision.

With this decision, the Court of Justice has lightened the burden of proof for victims of pre-Directive events. In this case, it is sufficient for the plaintiffs to prove that the contracts concluded with Repsol are the same as those sanctioned by the competition authorities. It is then up to the defendant to prove the contrary.

The second question asks whether, if it is established that the contractual relationship between the service station and Repsol is affected by the decisions of the national competition authorities, the sanction is necessarily to declare the agreement null and void.

The Court of Justice replied in the affirmative but clarified its answer. It points out that the national court must draw all the consequences of Article 101(2) of the TFEU. Accordingly, it must declare all contractual stipulations incompatible with Article 101(1) of the TFEU null and void by operation of law. However, the Court specifies that the entire agreement will be declared null and void only if the elements in breach of the TFEU cannot be separated from the agreement.

In the end, this decision is unlikely to change the practice of French courts. Indeed, it is quite rare for national courts to go against decisions of competition authorities. This decision serves as a reminder of the importance of distinguishing between the substantive and procedural provisions of the Damages Directive, while easing the burden of proof for victims who do not benefit from the Directive.