CJEU bolsters plaintiffs in first rulings on disclosure rules

The disclosure obligations are amongst the most controversial aspects of the Cartel Damages Directive. Several civil law jurisdictions have traditionally been very restrictive on disclosure or did not allow mandatory disclosure at all. The European Court of Justice has now delivered two judgments that will change the current approach and be a further step towards turning the EU into a more claimant-friendly environment. The judgments in PACCAR and RegioJet broaden the scope of disclosure, both regarding its temporal application and substance. While plaintiffs are welcoming the judgments, defendants and competition authorities may well be less pleased.

Disclosure under the Cartel Damages Directive

Articles 5 and 6 of the Cartel Damages Directive require Member States to introduce disclosure rights for cartel damage claims. These rules allow plaintiffs to rely on the defendant or third parties for evidence to support their claim. Disclosure is limited by proportionality, legal professional privilege, and certain types of information (e.g., leniency statements and settlement submissions).

Main CJEU findings

The provisions on disclosure broke new ground in some jurisdictions. There was controversy as to the time from which plaintiffs can rely on them and this depends on whether the provisions are substantive or procedural in nature. In PACCAR, the CJEU held that they are procedural. They can thus be applied to claims that arose before they came into force, in any pending litigation that started after 26 December 2014.

In RegioJet, the CJEU also took a wide view on the scope of the disclosure, albeit adding that any disclosure order is subject to the principle of proportionality:

  • Disclosure covers documents that did not exist before the disclosure request. Within limits, defendants must compile and classify information, knowledge, or data in their possession, thereby creating new documents for the purpose of disclosure to plaintiffs.
  • National law can restrict the disclosure of documents specifically prepared for the purpose of pending proceedings in competition authorities. However, this must not cover pre-existing information “submitted” for that purpose. 
  • The Directive even allows the national court to order such evidence to be seized. This also applies to documents specifically prepared for ongoing proceedings in competition authorities. The purpose is to allow an assessment of whether the documents contain information that is exempt from disclosure.

Finally, the CJEU held that a national court may order the disclosure of evidence for proceedings for damages connected with an alleged infringement of competition law, even if the proceedings have been stayed due to the Commission’s initiation of an investigation concerning the same infringement. However, the court again emphasized that the national court must ensure that the disclosure does not go beyond what is necessary in  light of the claim for damages at hand. The CJEU also added that the staying by a national competition authority of administrative proceedings it had initiated, on the ground that the European Commission has also opened proceedings, cannot be equated to a “closing” of those administrative proceedings within the meaning of Article 6(5) of the Directive. As a result, certain categories of information listed in Article 6(5) relating to the administrative proceedings must not be disclosed.

Practical implications 

The Cartel Damages Directive aimed to remove obstacles for plaintiffs. This objective seems to be guiding the CJEU’s interpretation. Its decisions remove obstacles to disclosure and leave defendants with the main challenge of proportionality. Proportionality is to be assessed by national courts, so far with limited guidance. RegioJet merely repeats the wording of Article 5(3) of the Damages Directive. There is no doubt that plaintiffs will challenge decisions that find disclosure requests to be disproportionate. This should lead to decisions that clarify when disclosure is disproportionate and thereby level the playing field with national rules on civil procedures. Until then, damage claims will remain on the rise. 

These judgments do not address how claims affect the decision to apply or not to apply for leniency. Companies and their advisors have to assess the pros and cons of such applications carefully and the rules on damage claims as interpreted by the CJEU play a significant role in this process. 

These decisions may also change the authorities’ approach since they increase the risk that documents from pending proceedings have to be disclosed. Authorities that need the open and transparent cooperation of companies may therefore want to consider how companies can cooperate without unnecessarily creating disclosable documents. The CJEU was aware of these risks and recognised the danger of “fishing expeditions” and of spoiling the investigations of competition authorities, but it considered them to be sufficiently mitigated by the principle of proportionality. Time will tell if this view was correct.