ECJ Reiterates principles Manfredi judgment

11 September 2006

Wilko van Weert

In its judgment of 13 July 2006 in the Vincenzo Manfredi case (“Manfredi Judgment”), the ECJ has taken the opportunity to confirm a number of principles, already generally established in earlier case law, to safeguard the rights of civil parties claiming damages incurred as a result of infringements of EU competition law. The court’s extensive citations of its own case law make this judgment an excellent point of reference for parties wishing to convince a national court of its standing to deal with claims for damages under Article 81 EC.

Background

In 2000, the Italian competition authority (‘Autorità Garante’) declared that the insurers Lloyd Adriatico Assicurazioni SpA, Fondiaria-Sai SpA and Assitalia SpA had implemented an unlawful agreement for the purpose of exchanging information on the insurance sector. The agreement facilitated the increase in premiums for compulsory civil liability insurance, relating to accidents caused by motor vehicles, vessels and mopeds, that was not justified by prevailing market conditions.

Vincenzo Manfredi and others brought actions before a local court in Bitonto, Italy, to obtain restitution of the increase in the premiums paid as a result of the agreement that had been declared unlawful by the Autorità Garante. Faced with legal issues that it had difficulty in resolving, the local court asked the ECJ to provide guidance in the interpretation of certain principles of EU competition law, which would allow it to determine whether the applicability of national competition law excluded that of Article 81 EC, whether it had jurisdiction over the case, and whether it could award damages under EC competition law.

Simultaneous application of national and EU competition law

The ECJ dealt first with the question of simultaneous application of national and EU competition law. The Court held that a restrictive practice which had been found to infringe national competition rules, such as that between insurers in the case concerned, may also constitute an infringement of Article 81 EC if there is a sufficient degree of probability that the agreement or concerted practice at issue may have an influence, direct or indirect, actual or potential, on the sale of similar insurance policies in the relevant Member State by insurers established in other Member States.

The ECJ also confirmed that, once an infringement of Article 81 EC has been committed, any individual should be able to rely on the invalidity of an agreement or practice prohibited under that article. The ECJ sent a clear warning signal that a finding of an infringement of national competition rules does not exclude an action for breach of the EU rules. Where there is a causal relationship between the infringement and any harm suffered, an individual should be able to claim compensation for the damages incurred.

Procedural safeguards

EU law does not, however, involve itself with the precise manner in which this right to claim damages for EU competition law infringements is pursued. It is, therefore, a matter for national law to provide the procedural safeguards for the exercise of that right. This includes guidance on the concept of ‘causal relationship’ - a principle that may vary slightly, according to national legal systems.

Although it is not a matter for EU law to specify which courts or tribunals have jurisdiction to hear actions for damages based on an infringement of EU competition law or to interfere with the detailed procedural rules governing those actions, the provisions that apply should be no less favourable than those that govern claims for damages based on infringement of national competition rules. Furthermore, in order for those procedural rules not to infringe EU law, they should be framed in such a way that they do not render the exercise of the right to seek compensation for damages resulting from a practice prohibited under Article 81 EC either practically impossible or excessively difficult. This also applies to the period of limitation
for claims. In any event, if a limitation period is short and not capable of suspension, it could be contrary to EU law if it renders the exercise of the right to seek compensation for damages practically impossible or excessively difficult.

Extent of damages

Finally, the ECJ made a statement on the principles regarding the extent of damages. Although the determination of compensation for damages is, in principle, a matter of national law, the ECJ formulated a few basic principles. If it is possible to award particular categories of damage, such as exemplary or punitive damages, in domestic actions similar to actions based on EU competition law, then the Manfredi Judgment held that it should also be possible to award such damages in actions founded on EU competition law. In addition, the ECJ concludes that individuals should not only be able to seek compensation for actual loss, but also for the loss of profit and interest.

It is clear that most of these issues could have been addressed by the ECJ by the application of existing case law. Nevertheless, the Manfredi Judgment is of particular interest when set against the background of the growing importance attached to private enforcement since the introduction of Regulation No 1/2003.

Private enforcement in its infancy in EU

Despite the support provided by existing case law, private enforcement in Europe is still very much in its infancy, especially compared to jurisdictions such as the United States, where some 90 per cent of antitrust proceedings are initiated by private parties. In the European Union, reliance has been placed on public enforcement, both by the European Commission and by national competition authorities.

Regulation No 1/2003 aimed at providing greater scope and cause for private enforcement alongside public enforcement. By handing down the Manfredi Judgment, the ECJ appears to have reiterated the importance of civil actions as a deterrent against infringements of competition law and as an instrument to increase the effectiveness of the enforcement of Articles 81 and 82 EC.

Whilst respecting the variation in private enforcement amongst the Member States, which derive from differences in court procedure, restrictions in jurisdiction, rules on the burden of proof and so on, the ECJ has, in its Manfredi Judgment, provided a guide for national judges to ensure the maximum effectiveness of private enforcement of EU competition law.

Judgment of the European Court of Justice in Joined Cases C-295/04 to C-298/04, Vincenzo Manfredi and Others v. Lloyd Adriatico Assicurazioni SpA and Others