Private Enforcement Act Adopted by the Polish Parliament

Less than four weeks later the Act was approved by the upper house of the Parliament ("Senat") and should be signed by the President by 9 June 2017. We discussed the highlights of the draft Act in a Legal Insights article dated 28 March 2017. The purpose of the present article is to provide more details about the adopted Act.

Although it was possible under general tort law rules to file a civil lawsuit for damages caused by an infringement of competition law, very few potential complainants decided to sue cartelists in Poland. This was mainly due to the difficulty in proving the extent of the damage and the causal link between it and the breach of competition law, which is a prerequisite for obtaining compensation.
The Act aims to make it easier to enforce compensation from a company that has infringed competition rules. This objective will be achieved thanks to the new rules on legal presumptions favourable to claimants, specific principles for collecting evidence or extended limitation periods, and others.

Below we set out the main rules introduced by the Act.

Presumption of damage

Under the Act it is presumed that an infringement of competition law causes damage. This presumption is rebuttable and the defendant has the right to contest it and prove otherwise in court. Therefore, due to the introduction of the presumption of damage, contrary to general tort law principles, the burden of proof in this respect falls on the defendant. The scope of the presumption is wider than under the Damages Directive, as it covers not only cartels (horizontal agreements) but also vertical restraints and abuse of dominant position.    

  
Presumption of culpability

The Act also introduces a presumption of culpability of an infringer. Like the presumption of damage, the presumption of culpability can be challenged by the defendant in court. The burden of proof is again shifted onto the alleged infringer, who will have to prove lack of fault on its side in order to be released from liability.

Pass-on presumption 

The Act creates a pass-on presumption where if any infringement results in an overcharge for a direct purchaser, it is presumed that the overcharge was passed on to the indirect purchaser who bought the products. As with previously mentioned presumptions, the defendant may try to challenge it by proving that the overcharge was not passed on or that the pass-on was limited.

An indirect purchaser can raise the pass-on presumption during a lawsuit against the infringing company. However, the presumption cannot be used by the defendant (infringer) in a case filed against it by the direct purchaser. In such a situation the burden of proof again lies with the defendant, and the infringer must therefore prove in court that the overcharge passes on and the direct purchaser is not entitled to damages or should be awarded only limited damages.

Joint liability of infringers

The Act introduces specific regulations regarding joint liability of two groups of infringers: (i) leniency applicants and (ii) small- and medium-size enterprises ("SME").

Leniency applicants are jointly liable to their direct or indirect purchasers or providers. In the case of other claimants, ie ones not included in their chain of supply, leniency applicants are jointly liable only if full compensation cannot be obtained from the other infringers.   

SMEs are jointly liable only towards their direct and indirect purchasers if their market shares have not exceeded 5 % during the infringement and their joint liability would irretrievably jeopardise their economic viability or cause their assets to lose all value. This exception does not apply to SMEs that played a leading role in the infringement or previously infringed competition rules.

Specific rules on collecting evidence

Under the new regulation, a claimant may request a court to order a defendant or a third party to disclose the evidence they possess (such as written documents or emails), if it may be crucial for the court to issue a judgment in the case. Evidence obtained in this way can be used only in private enforcement proceedings. An obligation to disclose evidence can also be imposed on the Office for Competition and Consumer Protection ("OCCP") if the evidence cannot be provided to the court in any other way. This rule does not apply to leniency statements and settlement submissions made by the infringer. The purpose of the last provision is to encourage cartelists to cooperate with the OCCP during antimonopoly proceedings. The defendant may also submit a request to order a disclosure of evidence subject to the same legal restrictions as in the case of the claimants' request.

The decision of a court on disclosure of evidence may be appealed to the court of second instance by the parties, a competition authority or a third party which is obliged to disclose the evidence.    

In addition, the Act stipulates that final decisions of the OCCP will be binding for courts in antitrust damages cases. Nevertheless, the Act will also be applied to competition law infringements with respect to which no proceedings were carried out and no decision of the authority was issued.

Quantification of damage

Under the new Act, the court will be entitled to base its judgment with respect to the quantification of damage on the guidelines issued by the European Commission and/or on the advice of the OCCP or another national competition authority having insight into the case. However, the court's assessment likely will be based above all on the opinion of economic experts and their arguments, as in other EU countries where private enforcement lawsuits are more common. 

Limitation periods

The lawmakers decided to extend the general limitation period from three to five years, although the limitation period does not commence until the infringement has ended and will be suspended upon the launch of an investigation by the OCCP or European Commission. In practice, therefore, the limitation period may last longer than just five years from the date on which the injured entity or individual learned about the damage and the infringer.

Entry into force
The Act will enter into force two weeks after its publication in the Official Journal of Laws, which follows the President's signature of the Act and will be applied to competition law infringements occurring after this date. Only some procedural rules (for example regarding disclosure of evidence or the binding effect of the OCCP's final decisions) will be applied to infringements that occurred before the entry into force of the Act.

Comment  

The Act should give entities and consumers harmed by competition law infringements opportunity and encouragement to sue infringing companies more often. The introduction of legal presumptions shifting the burden of proof onto the infringer and of specific rules on the disclosure of evidence, which should increase the chances of claimants succeeding in court, are steps in this direction.  

In practice, however, the success of private enforcement in Poland will ultimately depend on the effectiveness of the OCCP as a public enforcer.

On the other hand, the Act increases the legal and economic risk for competition law infringers, who should know that a breach of antitrust rules may lead to heavy fines by the OCCP or European Commission as well as damages for harmed companies and individuals awarded by civil courts. Having effective competition compliance programmes in place is thus even more important than ever.