In November, the Bulgarian Parliament began debating the amendments to the Competition Protection Act (CPA) with respect to the implementation of the EU’s Directive 2014/104/EE on Damages Actions for Antitrust Infringements (the “Directive”). Interestingly, the main aim of the Directive and the proposed amendments to the CPA – facilitating the private enforcement of infringements of competition law – coincides with what is probably the biggest cartel investigation in the history of the Bulgarian Commission for Competition Protection (CCP).
In October 2016, following an eight-month investigation, the CCP accused the six biggest fuel retailers in Bulgaria of forming a price-fixing cartel for the period from January 1, 2012, to June 30, 2015. A final ruling by the anti-trust regulator is expected sooner rather than later. The final results of the investigation are highly anticipated, since they will affect almost all Bulgarian private individuals and companies. If the CCP issues a ruling confirming the existence of a price-fixing cartel and that ruling is upheld in case of appeal, we could face the first serious wave of mass claims in Bulgaria.
Current Bulgarian legislation also provides a mechanism for compensation of the damages suffered by private persons due to infringement of the competition law, although this mechanism is not as clearly defined as it is in the proposed amendments. Similarly, the case law of the Court of Justice of the European Union holds that any person can claim compensation for harm suffered where there is a causal relationship between that harm and the infringement of competition law. However, in the 25 years of its existence before the CCP began its investigation of the fuel retailers, it did not have any significant ruling which could affect so many persons and thus test the view of the Bulgarian courts on the matter for compensation of the damages.
One of the most important amendments, in harmony with the Directive, is that the new law establishes a presumption that a cartel causes damages. Thus, claimants would not have to prove the causal relationship between their harm and the infringement of competition law, but the defendants – the participants in the cartel – would have to prove that there are no caused damages.
Another amendment, which is very important from a procedural point of view and which could have a major impact on any such claim, is that rulings of the CCP which have entered into force will become binding on the civil courts. The rulings of the CCP are administrative in their substance and as such they are subject to appeal before the administrative courts. However, the judgments of the administrative courts are not binding on the civil courts, which may review any matter decided by an administrative court and issue its own ruling. Thus, the proposed amendment will additionally facilitate claims in case a cartel is determined by the CCP. For the sake of completeness, it should be mentioned that the current rules of the CPA provide a similar option for the claimants. Still, the new amendments will strengthen their position.
The proposed amendments to the CPA will also regulate the statute of limitations for filing claims for damages. The general rule is that such claims must be filed within five years from the occurrence of the damage. Once adopted, the new law would provide that the statute of limitations will not run during the period of the CCP’s investigation, nor for a period of an additional year after its ruling enters into force. Such an amendment could have a significant impact on the amount of the damages that could be claimed. An immediate example is the ongoing investigation for the price-fixing cartel of the fuel retailers, where the alleged infringement started on January 1, 2012.
The Directive and the proposed amendments to the Bulgarian CPA will not solve all issues with respect to the potential mass claims based on infringement of competition law. One of the biggest obstacles for any claimant in Bulgaria is the high court fees – 4% of the claimed amount. The Directive and the Bulgarian legislature have failed to provide incentives for claimants to bring actions and assume the risk of losing battles with companies that are financially stronger and often equipped with better lawyers.
By Ilko Stoyanov, Partner, and Dimitar Vlaevsky, Attorney, Schoenherr Sofia
This article was originally published in Issue 3.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.