More discussion of damages for breach of EU procurement rules

XmeA8Fy3_400x400.png

Dr Ignacio Herrera Anchistegui has organised a greatly interesting BECCLE seminar on "Damages for breach of Public Procurement Law – Fosen-Linjen AS v AtB AS and its implications". It will take place this Thursday 1 March 2018 in Bergen. I have the pleasure and honour of presenting my views on the EFTA Court's Fosen-Linjen Judgment and to provide a comparative view with the UK Supreme Court's decision in Nuclear Decommissioning Authority. These are issues I had already addressed in the blog (see here and here) and, in trying to provide a more comprehensive critique of the case at the seminar, I have now tried to restructure my initial ideas and develop them in some more detail in a new SSRN working paper.

I hope the discussion will provide plenty additional ideas and food for thought, and I will try to improve the paper after the BECCLE seminar in view of that. Any additional comments or feedback on how to get it ready for publication would also be most welcome: a.sanchez-graells@bristol.ac.uk. Thank you for reading.

The abstract is as follows:

This paper offers some reflections on the position advanced by the EFTA Court that a simple breach of EU public procurement law is in itself sufficient to trigger the contracting authority's liability in damages (Fosen-Linjen). I argue that this position is flawed because it deviates from previous case law of the Court of Justice of the European Union (Spijker), and because it is based on interpretive errors and internal contradictions in the EFTA Court's reasoning. In criticising the EFTA Court's Judgment from the perspective of the harmonisation of EU law, I rely on the better view of the UK Supreme Court. The latter held that the liability of a contracting authority for the breach of EU public procurement rules under the remedies directive is assimilated to that of the State under the general EU law doctrine of State liability and thus requires a sufficiently serious breach (Nuclear Decommissioning Authority). My reflections are based on the need to keep procurement damages litigation constrained to its main function and limited to justified cases. I use this normative position to argue against the expansion of private enforcement of EU public procurement law as a correction of the shortcomings in its public enforcement.

The full reference of the paper is: A Sanchez-Graells, 'You Can't Be Serious: Critical Reflections on the Liability Threshold for Damages Claims for Breach of EU Public Procurement Law' (February 24, 2018). Presented at the BECCLE seminar on 'Public Procurement and Damages,' University of Bergen, 1 March 2018. Available at SSRN: https://ssrn.com/abstract=3129430.

Why is #competition law so special? Or how #leniency will kill private #damages actions (AG C-536/11)

In his Opinion of 7 February 2013 in case C-536/11 Donau Chemie and Others, Advocate General Jääskinen has developed a line of reasoning that goes well beyond the issue at hand (whether access to judicial documents should be granted to a potential claimant for damages derived from anticompetitive behaviour) and encapsulates the growing risk that an excessive level of protection of leniency applicants will kill (all) potentially significant developments in damages litigation. 

Indeed, as clearly emphasised by AG Jääskinen,
36. In my opinion it is inarguable that such proceedings [ie damages actions based on infringement of EU competition law] are comparable to either ordinary civil or criminal procedures, given that neither is concerned with the protection of leniency programmes or other specific features of public law proceedings in the context of enforcing competition policy (emphasis added).
For such strong claims, the AG's reasoning remains rather sparse and implicit, and seems to oversee the fact that in certain criminal procedures a similar scheme of plea-bargain can exist in some Member States and that, in any case, the current trend in competition law enforcement seems to search for a more balanced approach between public and private enforcement, or even for a boost of private enforcement (as is the case in the UK).

Moreover, if his argument was carried to the extreme, there would be no difficulty for Member States to create a 'damages-proof' system that completely excluded damages actions when they risked the effectiveness of the public enforcement of competition law (and, notably, of leniency programmes). 

But surely this cannot be in line with the (declared) policy of the European Commission--or with the functional and pro-effective stance taken by the CJEU in Courage and in Manfredi--despite the very clear Opinion of AG Jääskinen, who expressly states that 'the Courage and Crehan/Manfredi right of private parties to seek damages from economic operators that have breached EU competition law should not, in my opinion, be developed to a point that would imperil the efficacy of public law enforcement mechanisms, whether they be European or national' (para 62). In my opinion, this is a seriously troubling position, as it clearly sets a glass ceiling on the development of private enforcement of competition law in the EU and, ultimately, may be the final thrust against its true development.

I think that the criticism against the bluntness of the AG's Opinion is not dispelled by his effort to square the circle by making compatible the 'damages proofness' of leniency applications with a right of effective access to justice for antitrust litigants. In my opinion, there are two frontally contradicting arguments in the AG's Opinion.

On the one hand, and on the basis of the general requirements of the principle of effectiveness (effet utile) of EU law, the AG claims that

51. […] subjecting access to public law competition judicial files to the consent of the infringer of the competition rules amounts to a significant deterrent of the exercise to a right to claim civil damages for breach of EU competition law. The Court has ruled that if an individual has been deterred from bringing legal proceedings in good time by the wrong-doer, the latter will not be entitled to rely on national procedural rules concerning time limits for bringing proceedings. I can see no reason for confining the application of this principle to limitation periods, and would advocate its extension to onerous rules of evidence that have an analogous deterrent effect. I would further query the compliance of remedies that deter enforcement of EU law rights with Article 19(1) TEU (footnotes omitted, emphasis added).
On the other hand, however, the AG carves out a truly significant exception for leniency applications:
55. Article 47 [of the Charter of Fundamental Rights] is also relevant to the case to hand because it guarantees the fairness of hearings, which serves to protect the interests of the undertakings that have participated in the cartel. In my opinion, access by third parties to voluntary self-incriminating statements made by a leniency applicant should not in principle be granted. The privilege against self-incrimination is long established in EU law, and it is directly opposable to national competition authorities that are implementing EU rules.
56. It is true that leniency programmes do not guarantee protection against claims for damages and that the privilege against self-incrimination does not apply in private law contexts. Despite this, both public policy reasons and fairness towards the party having given incriminating declarations within the context of a leniency programme weigh heavily against giving access to the court files of public law competition proceedings where the party benefiting from them has acted as a witness for the prosecuting competition authority (footnotes omitted, emphasis added). 
In my view, both positions are logically irreconcilable in that leniency applicants would have (by definition) prevented by their own unilateral will, access by third parties to the parts of the file that could be used to claim damages against them (something the AG rightly criticises at para. 51 of his Opinion).

Moreover, I find unjustified the final statement whereby AG tries to balance them exclusively on the basis of the peculiarities of leniency programmes:
64. [...] from the point of view of proportionality, in my opinion a legislative rule would be more appropriate that provided absolute protection for the participants in a leniency programme, but which required the interests of other participants to a restrictive practice to be balanced against the interests of the alleged victims. [...] Furthermore, in my view and except for undertakings benefiting from leniency (sic!), participation in and of itself in an unlawful restriction on competition does not constitute a business secret that merits protection by EU law (emphasis added).
* * *
But, beyond the specifics of the reasoning, I think that the Opinion in Donau Chemie is troublesome because it indicates a very strong resistance against effective private actions and, in my view, excessive deference towards leniency applicants--and, what is more important, low priority to granting effective economic compensation to the victims of cartels. 

Maybe this is just an indication that a 'public enforcement only' model is better suited to EU competition law and its institutional architecture. But then, if such is the case, maybe it is better to accelerate the process and not wait for leniency protection to (slowly) kill private actions. Let's just bury them and avoid unnecessary litigation. Or, if we want them in the EU competition toolbox, let's abandon the 'pro-public' approach expressed in the AG Opinion. Otherwise, competition law evolution will continue running in circles... to everyone's loss.