- Which is the relevant legal framework that governs the actions for damages for infringements of competition law in Cyprus?
The relevant legal framework that governs the actions for damages for infringements of competition law in Cyprus is The Actions for Damages for Infringements of Competition Law (Law 113(I)/2017) (“Law”). The Law transposed into national law the Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (“Directive”).
For the purposes of an action for damages for infringements of competition law under the Law, and in line with the Directive, an infringement of competition law is defined as the infringement of Articles 3 and/or 6 of the Law on the Protection of Competition (Law 13(I)/2008) and/or Articles 101 and/or 102 of the Treaty on the Functioning of the European Union (“TFEU”).
Article 101 TFEU and Article 3 of the Law on the Protection of Competition (Law 13(I)/2008) prohibit anti-competitive agreements, concerted practices, and decisions by associations of undertakings. Article 102 TFEU and Article 6(1) of the Law on the Protection of Competition (Law 13(I)/2008) prohibit the abuse of a dominant position. It is noted that Article 6(2) of the Law on the Protection of Competition (Law 13(I)/2008) prohibits the abuse of economic dependence.
- Who is entitled to claim compensation for damages resulting from competition law infringements?
Any natural or legal person or public authority that has suffered damage resulting from anti-competitive conduct of one or more undertakings or associations of undertakings can seek to be fully compensated. Indirect purchasers of the products or services which constituted the object of the infringement or who have purchased goods or services derived from or containing them, can also seek to be compensated through an action for damages.
- Which damages can be claimed?
a) The claimant may seek to be compensated in full for damages suffered due to the anti-competitive conduct of the infringing undertaking(s) or association of undertakings. The right to full compensation enables the restoration of the party who has suffered damage to the situation it would have been in, had the infringement of competition law not been committed. This includes actual loss and/or loss of profit, as well as interest from the time the damage occurred until the time when the compensation is paid. It is noted that the causal relationship between the infringing conduct and the damage suffered must be proved by the claimant.
The Law does not mention anything further regarding the method for the quantification of harm.
The Law does, however, mention that where it is determined that the claimant has suffered harm, but it is difficult or practically impossible to determine the exact level of harm based on the evidence, the Court may request the assistance of the Commission for the Protection of Competition, if it deems appropriate.
b) A claimant may initiate proceedings for compensation regarding damages caused by the conduct of one or more undertakings or an association of undertakings which has taken place either in Cyprus or in the EU, or both, as long as it has negatively affected the claimant.
- Where can an affected party file an action for damages resulting from a competition law infringement?
Actions for damages for infringements of competition law fall under the jurisdiction of the District Courts of Cyprus.
- When can an affected party file an action for damages resulting from a competition law infringement?
An affected party may file an action a) after a decision of the Commission for the Protection of Competition, which is considered rebuttable presumption until the decision becomes final, or b) without any decision by the Commission for the Protection of Competition, in which case the affected party will have to prove the existence of infringement of competition law.
- What are the relevant timeframes for such actions?
The limitation period for exercising the right to seek damages under the Law is six years. The limitation period cannot start before the competition law infringement ceases and before the claimant becomes aware or can be reasonably expected to be aware of: a) the conduct which constitutes an infringement, b) the fact that the infringement has caused the claimant damage and c) the identity of the infringer.
The limitation period is suspended in cases where a national competition authority or the European Commission takes measures for the investigation or the procedure for infringement of competition law in relation to the infringement which is the object of the action for damages. Such suspension ends after the infringement decision has become final or after the proceedings are otherwise terminated.
The limitation period may also be suspended by the Court dealing with an action for damages for infringements of competition law, for up to two years (subject to the provisions of national law in regards to arbitration), when the parties participate in a process of consensual dispute resolution.
- What must a claimant who is an indirect purchaser prove to show that an overcharge was passed on to them?
Such claimant must prove that: a) there was an infringement of competition law by the defendant, b) the infringement resulted in an overcharge for the defendant’s direct purchaser, and c) the claimant, as an indirect purchaser, bought the said products or services which were the object of infringement or which derived from or contained such products or services.
The above does not apply where the defendant can prove in a reliable and satisfactory manner that the overcharge has not been passed on or entirely passed on to the indirect purchaser.
- Does the Law provide for any defences to be claimed against an action for damages?
The Law provides the defendants of actions for damages for infringements of competition law with the ability to invoke the passing-on defence. This means that a defendant can claim that the claimant bringing the action has partly or entirely passed on the overcharge which was the result of the infringement of competition law further down the supply chain.
- Does the Law provide parties the ability to request the disclosure of evidence that is in the possession of others?
The Law establishes that the Court may, upon the request of the claimant or the defendant, under certain circumstances, order the disclosure of evidence held by a claimant / defendant / third party.
Such requests to the Court, however, must be substantiated, and the evidence or categories of evidence requested must be described in a precise and specific manner. The Court will, in turn, decide on whether to issue the order or not, by considering whether the request is in line with the principle of proportionality, taking into account the interests of all parties and third parties concerned.
- Does the Court have the power to order the disclosure of evidence that contains confidential information?
When the Court deems appropriate, it may order the disclosure of such evidence, given that it also uses and effectively enforces the appropriate measures for their protection.
At the same time, when ordering the disclosure of evidence, the Court must also ensure that full effect is given to applicable legal professional privilege under Union or national law.
- Can the Court order the disclosure of evidence that is contained in the file of a national competition authority or the European Commission?
Under certain circumstances, the Court may order the disclosure of evidence which is contained in the file of a national competition authority or the European Commission. In doing so, the Court must maintain the application of the provisions governing the disclosure of evidence mentioned above.
It should be noted that the Court cannot request from a party or third party the disclosure of the following categories of evidence: a) leniency statements and b) settlement submissions.
The Law also contains certain limitations regarding the use of evidence obtained solely from the file of a national competition authority or of the European Commission.
- Does the Law provide for any sanctions that can be imposed by the Courts?
According to the provisions of the Law, the Court may impose sanctions to parties, third parties or their legal representatives in the following cases: a) their failure or refusal to comply with an order to disclose, b) their destruction of relevant evidence, c) their failure or refusal to comply with the obligations imposed by the order of the Court regarding the protection of confidential information, and d) their violation of the restrictions regarding the use of evidence.
- Do final decisions of the Commission for the Protection of Competition constitute proof of infringement under the Law?
Final decisions of the Commission for the Protection of Competition constitute an irrefutable presumption of infringement in an action for damages for infringements of competition law.
Article 146 of the Cyprus Constitution provides an absolute deadline of 75 days from the date of publication of the act / decision / omission in the official gazette or from the date it has come to the knowledge of the complainant for the filing of a recourse challenging such act / decision / omission. If the said deadline passes and the individual, institution or other corporate body which is concerned does not react, then it will not be possible to make any claim against the decision or act. Any such overdue claim will be considered void and the Commission for the Protection of Competition’s decision will become irrevocable.
Therefore, a decision is considered final when: a) 75 days have passed from the day of publication of the decision of the Commission for the Protection of Competition in the official gazette or from the day that it has come to the knowledge of the parties with a legitimate interest, and no recourse has been filed against the decision or act, or b) recourse has been filed and was unsuccessful.
- Do final decisions issued by the competent competition authorities of other Member States constitute proof of infringement under the Law?
Final decisions issued by a national competition authority or an appellate court of another EU Member State can be presented as prima facie evidence of infringement and can be assessed along with other evidence submitted by the parties.
- How are the infringing parties held liable for the damage caused?
The infringing parties are held jointly and severally liable for the damage caused by their joint conduct which infringed competition law.
The Law provides a derogation from the above for small or medium-sized enterprises (“SMEs”), as defined by Commission Recommendation 2003/361/EC, which are infringers of competition law. More specifically, SMEs are held liable solely with regards to their own direct or indirect purchasers, given that a) the SMEs’ market share in the relevant market was below 5% during the infringement period, and b) the application of the rules regarding joint and several liability would irreversibly endanger the SMEs’ economic viability and would lead to the loss of value of their assets. This derogation, however, does not apply when a) the SME has led the infringement of competition law or has coerced other undertakings to participate therein, or b) the SME has previously been found to have infringed competition law.
- Are Court proceedings the only available option for the obtainment of compensation?
Court proceedings are not the only available option for the obtainment of compensation. The Law also contains provisions referring to the effects of consensual dispute resolutions on the limitation period, as well the effects of consensual settlements deriving from such procedures, on the fine imposed by the Commission for the Protection of Competition, and on subsequent actions for damages.
More specifically, as mentioned above, subject to the provisions of national law in regards to arbitration, the Court may suspend the action for damages for up to two years for the parties of an action for damages that participate in a consensual dispute resolution.
The Law also provides the ability for the amount of compensation which will be agreed upon through consensual settlement to be taken into account by the Commission for the Protection of Competition as a mitigating circumstance, when deciding on the level of the fine it will impose.
Sofia Raunich is a legal adviser at Trojan Economics. She mainly handles competition law compliance programmes and commercial disputes on matters of competition law, including actions for damages for infringements of competition law.