Private Enforcement of the EU Rules on Competition – Nullity Neglected

Private enforcement of the European Union's rules on competition (Arts. 101, 102 TFEU) has become prominent as a counterpart to their public enforcement. Mostly, it is identified with tort actions brought under EU-harmonized national law by individuals claiming compensation for the harm suffered from anticompetitive agreements or practices. However, claims for compensation represent imperfect sanctions for the infringement of the competition rules because they are brought only once the damage is done and at a time when the conditions of competition may have changed. Typically also, such private actions are no equivalent or complement to administrative enforcement, but are largely dependent on it (follow-on actions). In addition, bringing them is attractive only if the damage suffered is considerable, sufficient evidence available, and the defendant solvent enough. Therefore, this paper revisits the first line of private enforcement, which is enforcing the nullity of anticompetitive agreements as provided for directly by primary Union law in Art. 101(2) TFEU. Nullity was a much-discussed issue under the authorization regime of Reg. 17/62, the first regulation implementing the enforcement of the competition rules, but has become somewhat neglected as a sanction since Reg. 1/2003 changed the enforcement system. Yet, it is precisely under the regime of immediate and direct applicability of both Arts. 101(1) and 101(3) TFEU, which Reg. 1/2003 reestablished, that the potential of nullity as a sanction of anticompetitive agreements could be fully activated. Such active use of invalidity challenges may lead to redefining the interface between EU law and national contract law, which is the line of severability of the innocent parts of a restrictive agreement from its anti-competitive parts. It should also result in reassessing the legal fate of follow-on transactions concluded by a party to an anticompetitive agreement with third parties, and it should bring abusive contracts within the realm of the nullity sanction that dominant firms impose on third parties. The guiding principle for such general reappraisal of the nullity sanction must be to bring its purpose fully to bear, which is to facilitate exit from anticompetitive agreements or from (abusive) contract clauses with a view to reopening competition and/or to allow the renegotiating of a transaction in terms of undistorted competition. This may mean that only the party whose freedom of competition is restricted may claim nullity.