Private Enforcement in France: The Set of Presumptions Established by the Damages Directive are Not Yet Fully Effective

Over the past few years, follow-on damages actions have significantly increased in Europe. Since the transposition of Directive 2014/104/EU on certain rules governing actions for damages under national law for infringements of competition law (the “Damages Directive”), the number of private enforcement actions before French courts has grown significantly, even though a large number of disputes are settled by transaction rather than by a court decision.

Since the adoption of the Damages Directive, a set of presumptions has been established to help victims who have suffered harm because of competition law infringements to succeed in their follow-on actions. However, in practice, it appears that it is not so easy for claimants to obtain compensation.

The Damages Directive was transposed into French law by the Ordinance of 9 March 2017 and has established a set of presumptions in order to facilitate redress for victims of anti-competitive practices sanctioned by a competition authority, on evidentiary grounds.

First, Article L. 481-2 of the French Commercial Code (FCC) has introduced into French law the irrebuttable presumption of fault attached to a final decision of the French Competition Authority. The new rules also make it easier to prove the existence of damage and the causal link between the anti-competitive practice and the damage.

On the one hand, Article L. 481-7 of the FCC states that it is presumed that cartel infringements cause harm unless proved otherwise. This presumption arises from the fact that most cartels are considered to disrupt the functioning of the market. It should, however, be noted that this presumption only applies to cartel infringements; abuses of dominance or vertical anti-competitive agreements, for example, are not covered by this presumption.

On the other hand, Article L. 481-4 of the FCC establishes a presumption of non-repercussion of overcharges incurred by victims of horizontal cartels. This means that the direct or indirect purchaser is deemed not to have passed on overcharges generated by the infringement to its own clients. To avoid being sanctioned for damages, the perpetrator of the anti-competitive practice must then prove that the victim has partially or fully passed on the overcharge.

These presumptions should have been a major step forward from the previous French regime for private enforcement actions. However, the Damages Directive’s stated purpose of facilitating redress for victims of anti-competitive practice does not seem so straightforward in practice.

The applicability ratione temporis of the presumptions has raised questions, notably as to whether presumptions established by the Damages Directive constitute substantive or procedural rules.

To recap, the Damages Directive prohibits the retroactive application of any national regulations transposing the “substantial rules” of the Damages Directive on the one hand and, on the other hand, prohibits the application of any national regulations transposing procedural rules (ie, non-substantial rules) to actions introduced before the transposition period of the Directive (ie, 27 December 2016).

Against this background, in its Volvo-Daf Trucks ruling dated 22 June 2022, the ECJ held that the rebuttable presumption of damage constitutes a substantive rule and therefore should not be applied to damages actions, although brought after the entry into force of the provisions transposing the Directive into national law, which related to an antitrust infringement that ends before the transposition period of the Damages Directive (27 December 2016). The same position has been adopted by the Paris Court of Appeal (eg, 28 June 2023: Forbo Salino).

Regarding the presumption of fault, the ECJ considered in its Repsol decision of 20 April 2023 that the presumption is a substantial rule that only applies to cases for which national competition authorities’ decisions became final after the transposition period of the Damages Directive. Similarly, in its decision dated 28 June 2023 (Forbo Salino), the Paris Court of Appeal followed the ECJ ruling.

In addition, the French Supreme Court (Cour de cassation) ruled that the presumption of non-repercussion of overcharges incurred by victims does not apply to infringements that arose before the transposition date of the Damages Directive in France (Cass. Com., 19 October 2022, No 21-19.197: Johnson & Johnson v Carrefour). In this case, it was considered that the presumption could only apply to infringements arising after the entry into force of the Ordinance (11 March 2017), and not after the end of the transposition period of the Damages Directive (27 December 2016). The French Supreme Court considered that applying the presumption for infringements before 11 March 2017, when the Directive had not been transposed, would have led to a contra legem interpretation of the French rule that was still in force (previously, under French law, the victim had to establish that the overcharge had not been passed on).

As a result, since most follow-on actions that have been introduced before French courts are based on anti-competitive practices that occurred prior to the transposition of the Damages Directive, victims do not benefit from the above-mentioned presumptions, making it harder for them to obtain compensation.

The Damages Directive has undoubtedly enhanced the legal framework of private enforcement actions. However, its philosophy to facilitate redress for victims of cartels does not yet appear to be fully effective.

While most of the rulings handed down by the French courts today concern the application ratione temporis of these presumptions, we can expect to see real substantive discussions concerning the presumptions in the coming years, as soon as the end of anti-competitive practices leading to private enforcement actions intervene after the transposition of the Damages Directive.

Issues should notably emerge regarding the calculation of damages, as the computation of damages involves a highly complex economic analysis that generally goes beyond the courts’ areas of expertise. For example, assessing the victim’s loss of profit requires a complex econometric analysis. While based on similar data, courts generally have to face contradictory opinions of econometric specialists appointed by each party, which could logically lead the judge to appoint an independent expert, making the procedure much longer and more expensive.