The EU Damages Directive will act as a catalyst for damages actions across Europe, particularly because it introduces a rebuttable presumption of harm.
Private antitrust litigation is continuing to develop apace, with the European (public-focused) and US (private-focused) models increasingly converging, with many infringements now resulting in both public enforcement and private claims.
Legislative developments are changing relevant legal frameworks in order to facilitate the bringing of claims, while recent court decisions have clarified some areas of uncertainty.
And as we noted last year, the claimant bar continues to expand, particularly outside its traditional stronghold of the US. Accordingly, increasing exposure to antitrust litigation risk globally continues to cause concern.
Multi-faceted legislative reform to facilitate antitrust litigation continues to develop in a number of jurisdictions. The most obvious – and the most far-reaching – of these reforms is the EU Damages Directive (104/14), which was finally adopted on 10 November 2014. Member states have two years to implement the Directive.
Explicitly intended to facilitate the bringing of compensation claims by businesses and individuals who have suffered loss as a result of anti-competitive conduct, the Directive will require significant changes in all the EU’s domestic legal systems:
- the Directive requires the introduction of a document disclosure regime for competition damages cases in the EU Member States that do not already have such a regime (the majority);
- it also establishes a minimum five-year limitation period for bringing a claim, with this period not starting to run until the relevant competition authority has completed its proceedings. Many member states currently have shorter periods;
- equally importantly, the Directive introduces legal presumptions in favour of claimants, including a presumption that any cartel infringement has caused loss, which has the effect of shifting the burden of proof onto defendants.
These potentially significant changes must be overlaid onto other, domestic, legislative developments also designed to facilitate redress for anti-competitive conduct. In Italy and the Netherlands, a system for competition law class actions has been in force for some years now, while France and Belgium introduced such systems during 2014. The UK’s Consumer Rights Bill, which is currently working its way through parliament, will introduce an ‘opt-out’ collective action regime, alongside a collective settlement regime and a framework for companies to make voluntary civil redress for anti-competitive conduct. Outside Europe, South Korea is actively debating proposals to allow class action lawsuits and injunctions for competition law infringements.
These regimes will coexist with, and perhaps eventually compete with, the established class action system in both the federal courts in the US and in each of the 50 separate US state judicial systems. The US jurisdictions have had opt-out class actions, the prospect of treble damages, and limited (or no) contribution rights for several decades, and US claimant firms are increasingly trying to bring this experience to the new European systems.
Judicial rulings also continue to increase the scale and scope of antitrust litigation risk. For example, the UK courts have shown themselves willing to order the disclosure of confidential versions of European Commission decisions in order to facilitate the bringing and prosecution of claims, such as in the air cargo cartel litigation.
The European Court of Justice – in a decision prompted by a reference from the Austrian courts – has recently concluded that member state legal systems must allow the claimants to recover for losses arising from so-called “umbrella” purchases. These are purchases from competitors of the cartelists who, although themselves innocent of any involvement in the cartel, were nevertheless able to charge higher prices (under the ‘umbrella’ of the cartel) than they would have been able to had the cartel not been in operation. As a result, cartelists may be held liable for losses caused to individuals or entities which are not their direct or indirect customers, and to all claimants for purchases from non-cartelist suppliers. The increase in the scale of liability risk is clear, and in Germany and the UK, such umbrella claims are increasingly common.
The general theme of judicial open-mindedness towards antitrust claimants can be seen in the Netherlands, where several claims vehicles have brought bundled claims before the Dutch courts, for example in the paraffin wax and air cargo case. Similarly, the number of claims brought in Germany is on the rise and, as there is no legislated class action regime, claimants are finding other ways of bundling claims, such as through the assignment of claims to special purpose vehicles.
In the UK, we are on the verge of an opt-out collective action regime. The key issue for business and consumer groups is whether the appropriate balance has been struck between the legislation’s attempt to promote claims while putting in place safeguards to avoid frivolous claims.
The continued expansion of US claimant firms into Europe will change the antitrust litigation landscape in Europe. These firms bring an aggressive approach to pursuing claims and a wealth of experience in areas that are relatively new in Europe, such as class actions, litigation funding and novel fee arrangements.
However, the EU has recently suffered a blow in its attempt to promote claims. It sought to lead by example, by bringing its own damages claim in the Belgian courts against participants of the elevators and escalators cartel. The claim was dismissed. The court expressed great scepticism as to the evidentiary value of the three economic reports filed by the Commission in relation to its damages claim. Similarly, in the synthetic rubber litigation in the UK, which settled during trial, the court during the course of the trial expressed considerable scepticism as to the ultimate value of complex economic expert evidence, particularly when weighed against factual evidence from the relevant businesses about the actual drivers of their prices and purchasing patterns.
Outside Europe, there has been a marked increase in the number of private antitrust cases in China (see theme 6). In the US, a key area of developing jurisprudence is the degree to which US antitrust laws reach conduct outside of the US. One can assume that the robustness of relief available in other jurisdictions will play at least a passive role in the development of that body of law.
The long-anticipated EU Damages Directive is the most significant development in European antitrust law for many years. Once implemented, it is likely to lead, over time, to an increase in claims and to claims being brought in member states where there have previously been few, if any, such cases.
Looking ahead to 2015
A key focus for 2015 will be the efforts of EU member states to grapple with the changes they are required to implement as a result of the Damages Directive. There is likely to be lobbying from parties with a vested interest in the manner in which the Directive is translated into domestic law, such as claimant and defendant firms, litigation funders, consumer organisations and business associations.
It will also be interesting to see the extent to which any member state courts seek to apply some of the principles underlying the Directive, without waiting for legislative change, to the extent that their domestic legal system permits them to do so.
Spurred by the developments discussed above, the claimant bar continues to expand outside of the US. Claimant firms are building their presence in the UK, recruiting both staff and clients aggressively, and opening offices in continental Europe. Brussels is one city of focus, but we would be surprised if the leading claimant firms did not expand their presence on the ground in other European jurisdictions, including Germany, and (in due course) Asia.