Analysis: “The Lisbon Appeal Court’s interpretation of Cogeco or how a Court of Justice’s reformulation of the questions referred can change everything” by Guilherme Oliveira e Costa
By judgment of 5 November 2020, the Lisbon Appeal Court confirmed the Lisbon District Court’s (first instance) ruling on the Cogeco case deciding that the applicant’s claim to compensation, based on an antitrust private enforcement action, is time-barred.
This recent judgment raises several interesting points, but, from an EU law perspective, there is no doubt that the most stimulating one is the Lisbon Appeal Court’s interpretation of the Court of Justice’s (CJEU) preliminary ruling decision (C-637/17) on this case, issued in March 2019, in relation to limitation periods.
To understand this analysis better, one must bear in mind that Directive 2014/104/EU (the Damages Directive) and the Portuguese law which implemented it (Law n.º 23/2018 of 5 June) were not applicable ratione temporis to the main proceedings (Cogeco, paragraph 34 and article 24 of the Law n.º 23/2018). Moreover, the Portuguese Courts also ruled that Article 102 TFEU was not applicable to the present case, since the Defendant’s abuse of dominant position did not have effect on trade between Member-States.
In a nutshell (for a deeper, but brief, analysis of the C-637/17 ruling see, for example, here and here), regarding limitation periods, the CJEU reasoned ‘that Article 102 TFEU and the principle of effectiveness must be interpreted as precluding national legislation which (…) does not include any possibility of suspending or interrupting that period during proceedings before the national competition authority’ (Cogeco, paragraph 55).
At first glance, the CJEU ruling seemed to suggest that, in cases where Article 102 TFEU was applicable, in order for national legislation to be compatible with it and the crucial principle of effectiveness, it would be necessary for such legislation to allow for a suspension or interruption of the limitation period due to the fact that a national competition authority started an investigation. This would mean, in the case at hand, that the Portuguese legislation, in particular Article 498(1) of the Civil Code, would be incompatible with the principle of effectiveness, regarding limitation periods. That was, at the time, the interpretation of many, especially those more enthusiastic with the fostering of private enforcement of competition law (which includes the current commentator).
Nonetheless, the Lisbon Appeal Court had a different interpretation, which is more aligned with the wording of the CJEU’s decision. The decisive point lies in the CJEU’s reformulation of the referred questions (Cogeco, paragraphs 35-37). The Lisbon District Court asked, indeed, about the compatibility of a national legislation which ‘does not include any provision requiring or authorising the suspension or interruption of that period simply because a competition authority has taken measures in the context of an investigation or a process relating to an infringement of competition law to which the action for compensation relates’ (Cogeco, paragraph 23(2)(c)). However, the CJEU reformulated the question and decided that what must be assessed was whether the national legislation ‘does not include any possibility of suspending or interrupting that period during the proceedings before the national competition authority’. (Cogeco, paragraph 37).
In other words, this means that, to observe the principle of effectiveness and, as such, to comply with Article 102 TFEU, what really matters is that a national legal order provides for the possibility (regardless of its nature or relation with competition law proceedings) of suspending or interrupting the limitation period during the proceedings before the national competition authority and not because of its investigation.
A striking example of the importance of this apparent small difference is that, in the Portuguese proceedings, even if Article 102 TFEU was to be applicable, Cogeco’s claim would be time-barred, since, under Articles 323 (1) of the Civil Code and 256 of the Civil Procedure Code, there is a way to promote the interruption of the limitation period by a legal instrument named notificação judicial avulsa.
The Lisbon Appeal Court’s interpretation, following the CJEU, is a harsh wake-up call to those who interpreted Cogeco in a manner that was friendlier to claimants in private enforcement proceedings, not only due to a desire for an approach that is more circumscribed to competition law – which led to ignoring some classical civil law solutions – but also because of the influence of Article 10 of the Damages Directive. This also means that the impact of Cogeco on other judicial actions all over the EU may be very limited.
To sum up, what results as crystal clear from all this (if there was still any doubt), is the importance of the Damages Directive, since it is undisputed that with its implementation throughout the EU, private enforcement has space to flourish, whereas before the Directive, this enforcement arm was constrained and framed in a reality which was not its own.
Guilherme Oliveira e Costa is a trainee lawyer in the EU and Competition Law department of a law firm in Portugal. He has a Master’s degree in International and European Law by Nova School of Law (Portugal). All opinions are strictly personal.