Private antitrust damage actions in Europe serve as a vital tool for holding companies accountable for their anticompetitive behaviour. However, these proceedings face significant challenges related to data availability and reliability. In this blog post, we delve into the complexities surrounding the quantification of damages in cartel cases and the impact of the defendants’ data advantages over claimants. In addition, we explore the role of disclosure rules in ensuring fair access to evidence and propose potential solutions to enhance the elimination of information asymmetry between claimants and defendants.
Quantifying Damages and Data Challenges
Cartels operate in secret, making it inherently difficult to trace their operations and accurately quantify the damages caused by their anticompetitive behaviour. These clandestine agreements among competitors to fix prices, limit production, and/or allocate markets restrict competition, resulting in harm to consumers and other market participants. However, the secret nature of cartels makes it challenging to ascertain the full extent of the harm caused.
In a scenario with evidence of an illegal agreement between competitors, such as inflating prices by a certain degree, claimants face the burden of proving that this agreement was indeed implemented. Although the presumption is that a violation of Article 101 of the TFEU leads to price increases and consequent harm for claimants (as outlined in Article 17(2) of Directive 2014/104/EU), it remains the responsibility of the claimants to quantify the actual damage suffered.
Therefore, on the one hand, it is crucial for claimants to recognise the importance of collecting and preparing their own data to the extent possible. Although such data-related work may require efforts and resources in addition to running the general course of business, a comprehensive set of relevant data provides claimants a solid foundation for building their court case and presenting robust evidence.
On the other hand, in most cartel damage claims, the defendants possess the largest volume of relevant data. They have a greater understanding of these data and can selectively choose which information to rely on in court. Moreover, although the defendants are aware of their illegal conduct from the outset, the claimants may regularly destroy copies of invoices and other information about their cartel-affected purchases in good faith, due to statutory retention periods, before they learn of the cartel violation.
This information asymmetry may place claimants at a disadvantage. As a result, claimants can face an uphill battle in quantifying damages and demonstrating the harm suffered due to the anticompetitive conduct.
The Role of Disclosure Rules
Recognising the information asymmetry claimants face in private competition litigation, a common legislative framework has been put into place within the EU through the adoption of Directive 2014/104/EU (“Directive”).
In Article 5, the Directive defines common standards for the disclosure of inter partes evidence to encourage injured parties to bring private actions by making the disclosure of evidence easier. This rule requires defendants to disclose “relevant evidence” that is within their possession or control and is relevant to the claimant’s case, including evidence which the infringer or third party to whom the request for disclosure is addressed must create ex novo by compiling or classifying information, knowledge, or data in their possession (CJEU, C-163/21, PACCAR e.a., paragraph 69).
The disclosure rule and its broad interpretation of the CJEU in its Paccar judgement are steps in the right direction to contribute to an effective enforcement of the injured parties’ right to compensation, yet it does not completely eliminate the considerable asymmetry of information between the infringer and the injured party. In fact, it is hardly possible to effectively prevent defendants from sharing data only selectively (i.e., withholding information that may be crucial for claimants to accurately quantify damages). This data asymmetry can lead to a disparity in the evidentiary resources available to the parties, and it does not ensure fairness of the proceedings.
Addressing Data Challenges
Courts that rely on the defendants’ data to quantify the harm caused by anticompetitive conduct should be very careful. The reliance on this source of data may not accurately reflect the actual harm the claimant suffered.
To address data challenges claimants face, it is crucial to consider more effective solutions that promote a more balanced and equitable playing field. For example, pooling data with other injured companies or increasing the level of transparency in the collection of the defendants’ own data can effectively mitigate the issues arising from the individual claimant’s lack of information.
First, the bundling of claims is an important tool for harmed companies. By bringing joint claims against defendants, claimants can pool their resources and data, share costs, and streamline the litigation process. The bundling of claims not only increases the data size and ensures that the data are representative of the entire market, but also reduces the financial burden and provides claimants with stronger bargaining power. The involvement of a third party may be useful — if not necessary — to protect the confidentiality of sensitive data in the relationship between the claimants.
Second, if the claimants can rely on neither their own data nor the effectiveness of data pooling across claimants, and the use of defendants’ data is inevitable, it is important to require defendants to provide detailed and transparent information about their data-collection procedures, which could include disclosing all data sources to which they have access, explaining how the data have been analysed and corrected, and addressing any potential limitations or biases in the data. Such transparency enables courts to assess the validity and accuracy of the data, leading to a more informed evaluation of the damages caused by the anticompetitive conduct.
Currently, there is a need for courts to have a deeper understanding of the challenges that claimants face when it comes to data asymmetry. In order to ensure a fair assessment of damages, courts should actively consider the data gap and approach it with a critical mindset.
Although the solutions discussed herein can certainly help bridge the gap between claimants and defendants, it is important to recognise that a complete elimination of the disparity may not be achievable. It is therefore crucial for the courts to recognise and address this inherent data disparity in private antitrust damage claims. In practice, this means that the courts should weigh the uncertainties and potential biases in favour of claimants.
By Natacha Espelta and Fabrice Van Boeckel