Competition law infringements not only hurt public interest by distorting competition, but may also inflict direct harm on businesses and consumers reflected in price surcharges. Antitrust enforcement is therefore not complete if the harmed third parties are not able to recover damages from the infringer. The European Commission has been very active in facilitating private damages actions, publishing, inter alia, the White Paper on Damages Actions for Breach of the EC Antitrust Rules in 2008 (“White Paper”).
In Serbia, where even public enforcement of competition law is a relatively novel development (the Serbian Commission for Protection for Competition, “CPC”, gained the power to issue fines only at the end of 2009), private enforcement is virtually untested. However, it is only a matter of time before private plaintiffs enter the spotlight in Serbia as well.
Follow-on v. standalone actions
There are two types of actions for private damages: follow-on actions, brought once the antitrust authority has determined an antitrust infringement, and standalone actions, brought in the absence of a prior determination of an infringement by the antitrust authority.
In the EU, the national court seized of an antitrust case involving an agreement, decision or practice under Article 101 or Article 102 of the Treaty, cannot make a decision that runs counter to the decision already adopted by the European Commission concerning the same matter. Moreover, when the proceedings are pending in parallel before a national court and the European Commission, the national court is required to “avoid” rendering a decision that is likely to conflict with the expected decision of the Commission (Article 16(1) of Regulation 1/2003). These rules are conductive to follow-on actions. In the U.S., the relevance of an infringement finding made in the course of a public enforcement action is more modest: according to the Clayton Act (Section 5(a), 15 U.S.C. § 16(a)), a final judgment rendered in civil or criminal proceedings brought by the government is considered a prima facie evidence of infringement in subsequent proceedings for damages. Some US courts have extended the application of this rule to the findings of infringements made by the Federal Trade Commission in administrative proceedings (see e.g., Farmington Dowel Products Co. v. Forster Mfg. Co., 421 F.2d 61, 69-70 (1st Cir. 1969)).
Private enforcement in Serbia
In Serbia, neither follow-on nor stand-alone antitrust actions are adequately regulated. The Law on Protection of Competition (Zakon o zaštiti konkurencije) (“Competition Act”) briefly and inconclusively addresses the issue of antitrust damages:
Damages
Article 73
Compensation for damages caused by acts and practices which represent an infringement of competition within the meaning of this Law, and which infringement has been established by a Commission decision, is realized in litigation before the court of jurisdiction.
The decision of the Commission referred to in paragraph 1 of this Article does not assume that the damage has occurred, but it has to be proven in court proceedings.
Two obvious points follow from the quoted provision: (i) the CPC is not competent to decide on damages, i.e. claims for damages are within the province of the courts, and (ii) in a subsequent litigation, the existence of damages is not presumed but has to be proven by the private plaintiff.
Under Serbian law, a claim for antitrust damages could be phrased as an action in tort (i.e delict), based on the general provisions of the Law on Obligations (Zakon o obligacionim odnosima). Tort liability derives from the general rule that “everyone is obliged to abstain from any action liable to cause damage to another” (Article 16 of the Law on Obligations). A plaintiff in a tort action has to prove the existence of a tortious act, damage suffered, and the causal link between the act and the damage. Fault of the tortfeasor is presumed, but the tortfeasor may rebut the presumption. There is no general rule under Serbian law dispensing with the fault requirement in case a tortious act represents a breach of statute and the Competition Act falls short of explicitly prescribing that a finding of antitrust infringement in the proceedings before the CPC prevents the defendant from exculpating himself in civil litigation for damages.
The Competition Act does not explicitly declare that the CPC’s finding of infringement is binding upon a court seized of a follow-on civil action for damages, although the language of paragraph 1 of Article 73 of the Competition Act seems to be built on that presumption. A procedural facility for recognition of the binding effect of a CPC’s decision could be found in Article 12 of the Law on Civil Procedure (Zakon o parničnom postupku). According to the said article, if a claim depends on the determination whether a particular legal relationship giving rise to the claim exists (preliminary issue), and such preliminary issue has not been decided by a court or another competent body, the court seized of the litigation may resolve the issue on its own, unless otherwise provided by a special law. Arguably, it would follow that the court seized of a claim for antitrust damages would be bound by an existing CPC determination of the infringement, while the plaintiff would be left with the task of proving the remaining two elements of a tort action – the damage and the causal link between the infringement and the damages suffered.
According to Article 223 of the Law on Civil Procedure, when a preliminary issue has not been already resolved by a court or another competent forum, the court may, at its discretion, decide not to resolve the issue on its own, but to suspend the proceedings until the issue is resolved in another forum. In the context of stand-alone actions, the question is whether the court should, based on Article 223 of the Law on Civil Procedure, suspend the proceedings until the issue of antitrust infringement is resolved by the CPC. Given the inability of a private plaintiff to cause the CPC to act (the proceedings before the CPC are initiated ex officio), it would not seem appropriate for a court to suspend a stand-alone litigation unless the proceedings before the CPC are already pending or imminent. Serbian courts have confirmed, in another context, that the discretionary right granted to courts by Article 223 of the Law on Civil Procedure is limited by the party’s right to a fair trial guaranteed by Article 6 of the European Convention on Human Rights and Fundamental Freedoms and Article 32 of the Serbian Constitution.
Standing of indirect purchasers
In the U.S., the general rule, established by the Supreme Court in Illinois Brick Co. v. Illinois (431 U.S. 720 (1977)), is that, under federal law, only direct purchasers, i.e. those who can show a direct contractual link with the infringer, may recover antitrust damages from the infringer. This differs from the stance taken by the ECJ in Manfredi (Joined Cases C-295−298/04, [2006] ECR I-6619, para. 61), that “any individual” who suffered harm may claim antitrust damages where there is a causal link between the prohibited conduct and the harm suffered.
Serbian law does not expressly regulate the issue of standing in antitrust damages actions, nor has this been clarified by the courts. As a general matter, the Serbian law principles of tort liability do not prevent indirect purchasers on whom illegal surcharges were passed-on from claiming recovery of damages from the infringer, provided such indirect purchaser may prove a sufficient link between the damages suffered and the act constituting the infringement. On the other hand, the existence of the relevant nexus may be affected by the remoteness of the plaintiff from the defendant in the chain of supply.
Collective redress
Damages resulting from competition law breaches are often spread over a large number of harmed users, who may not have sufficient incentive to individually pursue infringers. This is a natural obstacle to efficient private enforcement. At least a partial solution to this problem has been found in various procedural forms of collective redress. In addition, law firms in developed jurisdictions have devised sophisticated models for the representation of multiple claimants on a contingent fee basis.
Serbian law does not contain adequate procedural facilities for mass litigation. The existing rules on multi-party litigation are crafted for traditional situations involving but few plaintiffs. While the Law on Civil Procedure allows claims by qualified associations registered for protection of collective rights of a particular group (e.g. consumer associations), the relevant rules are not conductive to antitrust damage claims. The protected group is defined narrowly to include only individuals but not legal entities. Moreover, the plaintiff organization cannot claim damages on behalf of the protected group.
Limitation periods
The Competition Act does not regulate the statute of limitations for antitrust damage claims. Consequently, the general statute of limitations from the Law on Obligations applies, which means that the statute of limitations expires three years from the moment when the damaged party became aware of the damage and the identity of the tortfeasor, but in any case five years from the creation of damage.
As noted in the White Paper, limitation periods taken from general tort law are not always adequate for antitrust claims. In many cases, potential private plaintiffs will not be aware that a tortious act (e.g. a cartel) has been committed before the antitrust authority establishes an infringement. In order to facilitate follow-on actions, the White Paper therefore advocates for a special rule according to which the statute of limitations would start running anew once the decision of the antitrust authority establishing an infringement or the decision of the review court becomes final.
