European Court on relevant evidence in competition law cases
The European Court has held that disclosure of 'relevant evidence' in competition law cases does not just mean pre-existing documents, but that a party may be required to compile or classify knowledge, information or data in its possession and that it is for national courts to assess the workload and cost of creating such documents. This judgement, published on 10 November 2022, relates to damages claims in competition law cases. It has the potential to create a lot of uncertainty for litigants in damages claims for alleged competition law breaches - both the claimants and the alleged defendants.
What is the judgment about?
The judgement interprets the EU Directive Damages (Directive 2014/104) which gives victims of anti-competitive behaviour a right to bring damages actions. The case interprets the rules on the disclosure of evidence before national courts in disputes for damages suffered as a result of conduct in breach of EU competition law.
What was the case about?
The current on-going litigation that is key to this case are the damages actions arising from the European Commission ‘Trucks Cartel’ decision in 2016 when the Commission found that 15 international truck manufacturers had participated in anti-competitive agreements to fix and increase prices of trucks over a 14-year period between January 1997 and January 2011! There are ongoing damages cases in most EU countries and in the UK too. The question about disclosure of evidence arose in the context of litigation in the Barcelona commercial Court brought by people that bought trucks during this period brought an action for damages against the truck manufacturers.
The claimants wanted to have access to evidence held by the truck manufacturers to quantify the artificial price increase resulting from anti-competitive price fixing agreements. The truck manufacturers argued that the disclosure of evidence went beyond making documents available that were already in existence, and that this request was disproportionate. It was in this context the question went to the European Court to interpret the Damages Directive and what evidence a victim had a right to in a competition damages action. In particular, the Barcelona court asked whether the right to disclosure of ‘relevant evidence’ in the control of the defendant in the Damages Directive only relates to existing documents in their control, or whether the party to whom the disclosure request is addressed must create entirely new documents by compiling or classifying information, knowledge or data in its possession.
The information asymmetry problem in competition damages cases
The key problem in bringing an action for damages in competition cases is that it is often hard for a private litigant to have access to evidence against the infringer. This is because of information asymmetry between the infringer and the victim. The infringer knows what it has been accused of doing and knows what evidence to demonstrate its participation in anti-competitive conduct, whereas the victim of the damage caused by that behaviour does not have such evidence and it does not have powers to access this information, unless the Court orders disclosure. Getting a document dump of unprocessed, pre-existing and possibly very numerous documents makes such damages action very difficult to run and to prove.
What did the Court decide?
The Court held that the disclosure of ‘relevant evidence’ in the Damages Directive also covers evidence that the party to whom the request to disclose evidence is addressed must create in a new document by compiling or classifying information, knowledge or data in its possession. This is subject to compliance with the obligation of the national courts to restrict the disclosure of evidence to that which is relevant, proportionate and necessary, taking into account the legitimate interests and fundamental rights of the parties. The national court is required to decide whether the request for disclosure is excessive or too general in nature, or whether it would impose a disproportionate burden on the defendant or the third party concerned, whether as a result of the cost or the workload that that request would entail.
Does this even apply in the UK?
The Damages Directive was implemented in UK law as the Damages Directive Regulations 2017. Post-Brexit these Regulations are still in force and, even though UK is not obliged to follow Court of Justice judgements, it is still likely that the interpretation of the Directive will be of significant interest to the UK courts and will certainly be closely studied by parties bringing damages actions under the UK Damages Regulation. There were also several Trucks cartel damages actions in the UK, although many have been settled out of court.
The significance of this judgment
This judgment is really significant for victims running damages cases (and for defendants too!) and could lead to a lot of further litigation about when and in what circumstances defendants in competition litigation cases have to create new documents compiling or classifying information that they hold. It is clear that the claimants in such cases are not allowed go on a ‘fishing expedition’ for information, since excessive or very general requests are excluded. However, it is unclear what cost or workload is a ‘disproportionate burden’ on a defendant to create a new document compiling information and data and how a court will assess this cost. This is particularly difficult in cases where a competition law claim is for high level of compensation and spans an infringement period of over a decade (as in the trucks cartel damages case). This judgment is likely to lead to a lot more disclosure requests and more litigation on their scope!