As we reported previously, most of the new provisions in the amended Hungarian competition act (“Amendment”) came into force on 15 January 2017. One of the main changes is the introduction of a new chapter in the Hungarian competition act that largely mirrors the rules of the EU Directive on Antitrust Damages Actions (Directive 2014/104/EU; “Directive”). The most important changes address:
1. Violations of EU competition laws giving rise to damage claims in Hungary
The Amendment specifies that the violation of Article 101 or 102 of the Treaty on the Functioning of the European Union, section 11 or 21 of the Hungarian competition act, and the corresponding provisions in the laws of EEA Member States will qualify as competition law infringements, potentially giving rise to claims for damages in Hungary, under the new rules.
2. Binding effect of infringement decisions
The Amendment confirms that infringement decisions issued by the Hungarian Competition Office (“HCO”) and the European Commission shall be binding upon the civil courts. Decisions establishing infringements from competition authorities of other EU Member States shall be considered by the court as a relevant fact – meaning that the defendant will have the possibility to prove to the contrary. In either situation, Hungarian courts are only bound by the section of the decision establishing infringement.
3. Right to full compensation
The Amendment seeks to ensure that all participants in the value chain who suffer damages due to a national or EU antitrust infringement can claim full compensation regardless of their position. In order to avoid overcompensation, the new rules stipulate that damages cannot be claimed in the amount of the overcharge that has been passed on and damages awarded by the court must equal the actual damages suffered. It is expected that sophisticated economic models and HCO opinions may become necessary to establish actual damage amounts.
Where multiple parties commit an antitrust infringement in the course of an agreement or concerted action, the infringers shall be jointly and severally liable for the damage caused to any third party. Courts may not disregard the rules on joint and several liability in antitrust cases. The only exception is that liability of leniency applicants and small or medium sized enterprises may be limited, subject to strict conditions. Contractual clauses excluding or limiting the liability for an antitrust infringement are null and void.
5. Burden and specific presumptions of proof
Claimants must prove that they suffered damages as a result of the difference between the actual price paid and the market price that would have applied but for the antitrust infringement. In infringements involving cartels, it will be presumed that the violation resulted in damages; however, the presumption does not extend to the exact amount. The Amendment upholds the rebuttable presumption that, in the case of cartels, the antitrust infringement had a 10% effect on the price. Infringers may nevertheless claim that the damaged party has passed on all or part of the price difference. If the amount passed on cannot be established, the court may rely on estimations, the HCO’s opinion or European Commission guidelines.
6. Rules on the disclosure of evidence
Given that in most cases the relevant evidence is held by an adverse or third party, or the competition authority, the Amendment provides the claimants with extensive rights to request the disclosure of evidence relevant to their claim. However, the request must be duly justified; disclosure of evidence may only be ordered to the extent necessary and the interests of all parties shall be equally considered. In addition, certain types of evidence are excluded from disclosure, including: leniency applications, settlement declarations and documents under client attorney privilege. Should any of the parties fail to disclose as required, the court may order the payment of costs incurred and impose a fine in the maximum amount of HUF 50 million (approx. EUR 160,000).
7. Promoting alternative dispute resolution
In addition to facilitating private enforcement, the Amendment also promotes alternative dispute resolution in the antitrust damages context. Under the new rules, the HCO must consider an infringer’s involvement in alternative dispute resolution when imposing fines. Additionally, liability of undertakings that entered into an agreement following alternative dispute resolution shall be limited, both towards the claimants and other infringers.