Private action procedure

Third-party funding

May litigation be funded by third parties? Are contingency fees available?

At a European level, there are no binding rules on litigation funding or contingency fees. The EC has, however, established a series of non-binding principles in its 2013 Recommendation on collective redress mechanisms and in its 2018 report on progress made in the practical implementation of that Recommendation. Overall, the EC has urged member states to impose restrictions to avoid abusive litigation and conflicts of interest.

National regimes differ and courts regularly deal with the admissibility of litigation funding structures. The topic is particularly controversial in Germany. Here, the most common approach is the ‘assignment model’: claimants assign their claims to a claims vehicle, which then files the action, bears all costs and fees of the proceedings and disburses a certain percentage of any awarded damages to the claimants. On the one hand, the German Federal Court of Justice adopted a relatively liberal approach in LexFox and AirDeal. On the other hand, there have been several decisions by German first and second instance courts declaring claims vehicles inadmissible. In 2015, the Higher Regional Court of Düsseldorf dismissed a damages claim by Cartel Damages Claims (CDC) relating to the cement cartel after a 10-year court battle and ruled that the assignment of claims to CDC was void because the vehicle was not sufficiently funded. This issue was corrected by CDC in a subsequent claim filed at a different court, which has been settled in the meantime. In February 2020, the Regional Court of Munich rejected a large claim seeking more than €600 million in damages from truck manufacturers. It identified several potential conflicts of interest in the funding structure, similar to the EC in its 2018 report. For instance, the court considered that profitability considerations by the litigation funder could ultimately risk early settlements that might not be in the claimants’ best interests. In May 2020, February 2021 and January 2022, the Regional Court of Hanover and the Regional Court of Stuttgart dismissed damages claims concerning the sugar cartel and the log wood cartel because they considered assignments to be invalid. All decisions have been appealed. Claimants are at the same time exploring new funding structures. In December 2020, the claims vehicle TransAtlantis, a joint venture between two US investment funds, filed a mass damages claim at the Regional Court of Munich and offered claimants that assign their claims to the vehicle an upfront cash payment instead of a participation in any damages ultimately awarded by the court. The vehicle filed a parallel claim in the Netherlands. As of now, significant legal uncertainty for claims vehicles remains in Germany, but a ruling by the Federal Court of Justice providing more clarity is to be expected.

In the Netherlands, collective actions have succeeded in two recent cases. Both claims, one brought by CDC relating to the sodium chlorate cartel and one brought by Stichting Cartel Compensation relating to the air cargo cartel, were considered as admissible by the Amsterdam Court of Appeal (decisions of February and March 2020, respectively).

In the UK, finally, third-party litigation funding is quite common and the Competition Appeal Tribunal has, for instance, approved the funding of two applications for collective proceedings following the trucks cartel ‒ one by UK Truck Claims Limited (in 2019) and the other by Road Haulage Association Limited (in 2020). Both decisions have been appealed.

Jury trials

Are jury trials available?

Jury trials are not available at the two European courts nor do any rules at European level exist on the availability of jury trials in the member states.

Discovery procedures

What pretrial discovery procedures are available?

The EU Damages Directive harmonised the rules on discovery in Europe and lowered the threshold for disclosure requests, by both plaintiffs and defendants. Upon the plaintiff’s request, national courts may order the defendant or third parties to disclose evidence that plausibly supports the claim for damages (eg, allows plaintiffs to quantify damages). Defendants can counter this by requesting that plaintiffs or third parties provide evidence that supports defence arguments such as the pass-on of potential damages to the plaintiff’s customers (article 5(1)). Moreover, in contrast to previous discovery regimes in most jurisdictions that limited requests to items specified by the applicant, article 5(2) EU Damages Directive allows requests for the disclosure of ‘relevant categories of evidence’, as long as these categories are described as precisely as possible on the basis of reasonably available facts.

Despite these broad basic principles, to avoid excessive disclosure (in particular, fishing expeditions), article 5(3) EU Damages Directive requires courts to conduct a proportionality assessment before ordering the disclosure of evidence. The EU Damages Directive (article 6(6)) further expressly excludes leniency statements and acknowledgements in connection with settlement discussions from disclosure, which includes verbatim quotations of such statements in other documents. However, once a competition authority has closed its investigation, certain parts of the competition authority’s file are no longer out of reach for courts (article 6(5)).

The majority of the member states have implemented the new rules literally or almost literally. However, for legal systems unfamiliar with disclosure, this new framework brings about fundamental changes and national courts might need time to acclimatise:

  • Spanish courts, for instance, have already applied the new rules and ordered the disclosure of documents in the Trucks case. The Commercial Court of Barcelona, however, had doubts in relation to a disclosure request relating to the Trucks case and referred certain questions to the European Court of Justice (ECJ) for a preliminary ruling.
  • In Germany, courts so far hesitate to make use of the new rules. The Munich Regional Court, in a case related to the trucks cartel, denied a disclosure request targeting documents that the claimant had owned but did not possess anymore. According to the ruling, such documents are out of scope of the new disclosure rules. In contrast, in a case related to the car battery recycling cartel, the Hanover Regional Court granted a claimant’s request to disclose the full confidential version of the Commission’s infringement decision. Upon appeal by the defendant, however, the Celle Higher Regional Court suspended the enforcement of the disclosure request until the appeal proceedings are final. The court saw potential grounds for the defendant to successfully appeal the ruling of the Hanover Regional Court because the Commission's infringement decision mentions names of individuals, and their disclosure could violate privacy laws. 
  • The English courts, finally, continue to grant extensive disclosure. Thus, in its first judgment applying the EU Damages Directive related to a follow-on claim relating to the Trucks case, the English High Court ordered the disclosure of the entirety of the EC’s file and only excluded leniency and privileged documents.
Admissible evidence

What evidence is admissible?

European law does not provide binding rules on the admissibility of evidence in national civil litigation proceedings. The EC has, however, issued non-binding guidelines for national courts covering two topics: the quantification of damages (Communication on quantifying harm in antitrust damages actions and accompanying Practical Guide, 2013) and the quantification of a potential pass-on of damages to indirect purchasers of the cartelist (Passing-on Guidelines, 2019).

If national courts involve the ECJ by way of a request for a preliminary ruling, the ECJ usually relies on the facts established by the national court. Notwithstanding this, the ECJ has indicated that the taking of evidence (eg, hearing a witness) is in theory possible in a preliminary ruling procedure (Bosman, C-415/93 of 1995). To date, this has not become relevant. As an alternative to taking evidence itself, the ECJ can request clarification from the referring court (article 101(1) Rules of Procedure of the Court of Justice).

Legal privilege protection

What evidence is protected by legal privilege?

According to article 5(6) EU Damages Directive, member states must ensure that national courts give full effect to applicable legal professional privilege under EU or national law when ordering the disclosure of evidence. The rules regarding legal privilege differ considerably in Europe.

  • In common law jurisdictions with extensive disclosure procedures, such as the UK, Ireland and Cyprus, legal privilege is typically more relevant. The more documents that are potentially subject to disclosure, the greater the practical relevance for protection of privileged content. Legal privilege in these countries protects documents that have been created for the purpose of giving or obtaining legal advice or in preparation for litigation.
  • In comparison, in civil law jurisdictions such as Germany, disclosure requirements have traditionally been much narrower, which is why the protection of legal advice is of less practical relevance or does not exist at all. It remains to be seen whether jurisdictions with narrower or no existing concepts of legal privilege will introduce additional protection for defendants now that a practical need has arisen following the introduction of broad disclosure possibilities.

 

With regard to trade secrets, the EU Damages Directive establishes that they need to be protected appropriately. National courts should have at their disposal a range of measures to protect confidential information from being disclosed during proceedings (Recital 18). According to the EC, measures could include the redaction of confidential information, confidentiality rings, the appointment of experts to review confidential information or in camera (ie, closed) hearings (Guidance for national courts on how to protect confidential information when handling disclosure requests, 2020).

Criminal conviction

Are private actions available where there has been a criminal conviction in respect of the same matter?

Private actions are available regardless of whether there has been a criminal conviction or not.

Contrary to the approach in the United States, criminal sanctions for antitrust infringements (imprisonment or financial penalties) do not play a major role in Europe. European law does not provide for criminal sanctions (article 23(5) Council Regulation (EC) No. 1/2003). While most European jurisdictions have criminal sanctions for at least some types of antitrust infringements (eg, in Germany, bid-rigging is a criminal offence), in practice they focus on administrative sanctions such as fines.

Utilising of criminal evidence

Can the evidence or findings in criminal proceedings be relied on by plaintiffs in parallel private actions? Are leniency applicants protected from follow-on litigation? Do the competition authorities routinely disclose documents obtained in their investigations to private claimants?

Evidence or findings in criminal proceedings are typically of no or only limited relevance in private actions because criminal sanctions are rare in Europe. Where criminal sanctions have been imposed, whether evidence and findings from the criminal case are admissible in civil actions depends on the national regime.

Leniency applicants are (only) partially protected from follow-on litigation. They are not immune to civil damages claims, unlike in the United States, but are exempt from joint and several liability for damages caused by the other cartelists (article 11(4)-(6) EU Damages Directive). Leniency applicants are thus only liable to their own direct and indirect purchasers. Two exceptions exist to this basic principle:

  • where purchasers cannot obtain full compensation from the other cartelists (eg, because they are insolvent), leniency applicants are jointly and severally liable for harm caused by the cartel;
  • regarding other cartelists, leniency applicants may be required to pay contribution for claims related to damages caused by cartel outsiders, namely umbrella effects.

 

Private claimants usually rely on the (administrative) decision by the EC or a national competition authority, which establishes irrefutable proof of the infringement. The EC publishes its decisions on its website. Since certain passages must be redacted before publication, the publication of these EC decisions can, in some cases, take a long time, and in rare instances (Air cargo) up to five years. In Evonik Degussa (C-162/15P of 2017), the ECJ dealt with the question of which parts of an EC decision must remain confidential. The ECJ ruled that the following parts cannot be considered as confidential: quotations from leniency statements; and quotations from documents provided by the defendant in support of its leniency statement unless the defendant or a third party can claim legitimate interests of confidentiality such as business and trade secrets.

In practice, plaintiffs in addition often request access to a version of the EC’s decision with fewer redactions, the full confidential version of the EC’s decision or documents from the EC’s file. Obtaining access to these documents is difficult. To protect the effectiveness of their leniency programmes, the EC and national competition authorities are reluctant to disclose documents and evidence obtained in their investigations to private claimants. European courts have established high hurdles for national courts. Thus, in its controversial decisions Pfleiderer (C‑360/09 of 2011) and Donau Chemie (C‑536/11 of 2013), the ECJ held that European law does not per se preclude private damages claimants from obtaining access to leniency statements. However, the ECJ stressed that, before ordering the disclosure of documents, national courts must carefully weigh the goal of compensating potential damages against the effectiveness of leniency programmes. Following the Pfleiderer judgment, the German national court that had referred the question to the ECJ rejected the plaintiff’s request to access the defendant’s leniency statements.

The EU Damages Directive (article 6(6)) expressly excludes leniency statements and settlement submissions from disclosure (blacklist) so that a case-by-case assessment is no longer required for these documents.

Defendants threatened with the publication of details they consider to be confidential can seek interim relief with the ECJ pending a decision on the merits (ECJ’s orders in the matters AGC Glass Europe (C-517/15P) and Evonik Degussa (C-162/15P)).

Stay of proceedings

In which circumstances can a defendant petition the court for a stay of proceedings in a private antitrust action?

The ECJ dealt with the question of a stay of private antitrust actions in its Masterfoods judgment (C-344/98 of 2000), which was the basis for article 16(1) Regulation 1/2003. The judgment concerned a follow-on damages claim filed at a national court that was based on a decision by the EC that was, at the same time, being appealed to the General Court. Such situations arise regularly in follow-on damages claims. An example is the Trucks case where one manufacturer has appealed the EC’s decision to the European courts, while claimants have already filed civil damages claims involving trucks sold by this manufacturer at national courts. Another example – an abuse of dominance case – is the civil damages claims filed against Google in Germany, the Czech Republic and the United Kingdom based on the EC’s decision in the Shopping case, which Google has appealed.

In Masterfoods, the ECJ held that any national civil action should not proceed to trial if the outcome of the civil dispute depends on the validity of the EC’s decision. The ECJ stated that rulings by national courts must be consistent with decisions from European institutions. Thus, in follow-on damages claims that rely on an appealed infringement decision, the ECJ ruled that national courts should stay the private proceedings pending a final judgment in the appeal proceedings. In compliance with this ruling, many German courts have stayed proceedings relating to the Trucks case where they involve the manufacturer that has appealed the EC’s decision.

Standard of proof

What is the applicable standard of proof for claimants? Is passing on a matter for the claimant or defendant to prove? What is the applicable standard of proof?

European law defines requirements that national regimes must meet with regard to the standard and burden of proof. For the core prerequisites of a damages claim, namely competition law infringement, causation, damages amount and pass-on, the requirements are as follows:

  • To prove a competition law infringement, the plaintiff can, in follow-on damages cases, rely on the decision by the competition authority, which is binding on the court. In standalone claims, which are rare in practice, the plaintiff needs to provide separate proof.
  • With regard to causation, the EU Damages Directive (article 17(2)) establishes a legal presumption that cartel infringements cause harm. This legal presumption goes further than the factual presumption that has, for instance, been established in German jurisprudence. While the factual presumption only constitutes one factor in the overall assessment of causation and must be weighed against all other available factors, the legal presumption applies unless the defendant is able to prove the contrary.
  • For the quantification of harm, neither the burden nor the standard of proof must render the exercise of the right to damages practically impossible or excessively difficult (article 17(1) EU Damages Directive). More specifically, national courts must be entitled to estimate the amount of damages where it is impossible or excessively difficult to precisely calculate that harm. European law does not impose any type of presumption in this regard, but does not prohibit corresponding national rules either. The Romanian legislator in October 2020 introduced a rebuttable presumption that cartels lead to a cartel overcharge of 20 per cent.
  • The burden of proof for passing-on lies with the claimant or the defendant, depending on whether, respectively, the pass-on is used as an offence (indirect purchaser claims damages) or a defence (cartelist rejects damages claims by direct purchaser) (articles 13 and 14 EU Damages Directive). Claimants and defendants can request the disclosure of evidence from the other party or third parties. Article 14 EU Damages Directive creates a certain asymmetry in the standard of proof between the offensive and defensive use of the pass-on, as it grants indirect purchasers a rebuttable presumption of a pass-on.
Time frame

What is the typical timetable for collective and single party proceedings? Is it possible to accelerate proceedings?

The duration of civil proceedings in national courts differs across Europe. This factor plays an important role when determining where to file a civil claim (forum shopping):

  • In Germany, cartel damages actions involving the usual two appellate stages take on average five to six years. The trend is towards longer proceedings, especially where claims are bundled.
  • In Spain and the Netherlands, the situation is similar, with very long durations in particular for bundled claims. Thus, in Dutch courts, several bundled claims are pending inter alia relating to the air cargo, trucks, gas-insulated switchgear, escalators and elevators, cathode ray tubes, bitumen, beer and sodium chlorate cartels. None are resolved yet, even though the first claim relating to the air cargo cartel, for instance, was filed in 2010.
  • In the United Kingdom, proceedings are even longer (but often also even larger). For instance, many of the follow-on damages claims relating to the trucks cartel were filed in 2016 or 2017. The first instance trials for these claims are now taking place. Further, there is the possibility of appeals to the Court of Appeal and possibly the Supreme Court. Another example is the Merricks v Mastercard case, in which the English Supreme Court in December 2020 issued its long-awaited decision on the admissibility of collective proceedings. This case was filed in 2016 and the Supreme Court’s decision concerns only one of many issues under dispute.

 

If national courts involve the ECJ and request a preliminary ruling, the current average duration of such proceedings before the ECJ is 15.5 months according to the court’s annual report for 2019. It is not possible to accelerate proceedings before the ECJ in antitrust matters.

Limitation periods

What are the relevant limitation periods?

The relevant ECJ precedent on limitation rules is Cogeco (C-637/17 of 2019). It relates to a follow-on damages claim filed by Cogeco in Portugal based on an abuse of dominance by a national TV sports channel, which was sanctioned by the Portuguese competition authority. The Lisbon District Court considered the claim to be time-barred under the national three-year limitation period. The court concluded that the period had started to run in 2009 with the initiation of the infringement proceedings and had thus expired before Cogeco filed the damages action in 2015. The court was of the opinion that the running of the statute of limitation was not suspended during the Portuguese competition authority’s investigation, but referred the question to the ECJ. The ECJ considered the Portuguese limitation rules to be too restrictive. It concluded that the combination of a three-year limitation period and no suspension rule made it practically impossible for Cogeco to exercise its damages rights and thus undermined the full effectiveness of EU law. The Lisbon District Court nevertheless dismissed the claim on the basis that it was time-barred. The court noted that the ECJ had overlooked that, even though the running of the statute of limitation was not suspended ex lege, Cogeco could, under Portuguese law, have applied for a suspension.

The EU Damages Directive, which was not yet applicable at the time of Cogeco, provides detailed rules on limitation periods (article 10 EU Damages Directive) that have now been implemented in all member states (but may not apply retroactively):

  • the limitation period for cartel damages claims is five years;
  • the limitation period does not begin to run before the infringement has ceased and, cumulatively, the claimant has knowledge (or can reasonably be expected to have knowledge) of:
    • the behaviour constituting the infringement;
    • the fact that the infringement caused harm; and
    • the identity of the infringer; and
  • the running of the limitation period is suspended for the duration of the competition authority’s investigation and any subsequent appeal process plus an additional period of one year after the infringement decision has become final.

 

The EU Damages Directive does not prevent member states from maintaining absolute limitation periods (ie, limitation periods that start to run independently of the claimant’s knowledge (Recital 36 EU Damages Directive)). Thus, in Germany, an absolute limitation period of 10 years exists, starting on the day on which the damage occurred (for all damages until 26 December 2016) or, respectively, the infringement ended (for all damages from 27 December 2016 onwards). The situation is similar in the Netherlands, where an absolute limitation period of 20 years exists that begins to run from the moment the damage occurred (for all damages until 9 February 2017) or the day after the infringement ended (for all damages from 10 February 2017 onwards). There are no equivalent absolute statutes of limitations in Spain and the United Kingdom. In accordance with the ECJ’s judgment in Cogeco, the EU Damages Directive states that absolute limitation periods must not render it practically impossible or excessively difficult to exercise damages rights (Recital 36).

Appeals

What appeals are available? Is appeal available on the facts or on the law?

Appeals available before national courts are determined by national procedural laws. Next to appeals at national level, a request for a referral of selected questions to the ECJ may be an option. Such referrals are only admissible if they relate to legal questions, namely the interpretation of EU law.