THE EUROPEAN COMMISSION (THE Commission) plays hardball with respect to breaches of antitrust rules by companies. The fight against cartels remains a key priority for the Commission and record fines (for example with respect to elevator companies and car glass producers) have been frequently imposed.European Commission as driving force
These fines are paid into the European Union (EU) budget. In fact, it does not increase the budget but reduces the contribution from member states to the EU (and so from taxpayers). In this respect, these fines do not lead to direct compensation for the businesses, public authorities or consumers in Europe that lose much money each year as a result of infringements of competition law. Therefore, private enforcement of competition law, where victims claim interim relief or damages before national courts for breach of the antitrust rules, is an ongoing item on the agenda of the Commission.
In this respect, the Commission has put forward proposals for specific policy choices and measures for the member states that would ensure that all victims of infringements of competition law have access to effective redress mechanisms so that they can be fully compensated for the harm they suffered. Strikingly, the Commission itself – apparently under the pretext of ‘practise what you preach’ – has filed cases seeking compensation for damages suffered due to an illegal cartel.
The Commission emphasised that all victims must receive full compensation of the real value of the loss suffered. This extends both to the actual loss due to an anti-competitive price increase, and the loss of profit as a result of any reduction in sales. It encompasses a right to interest.
Furthermore, not only can direct purchasers initiate private enforcement actions (ie purchasers who had direct dealings with the infringer) but also indirect purchasers (ie purchasers to which the direct victim passes on the price overcharge by raising its own price).
Increasingly, infringers of competition rules have been faced with private enforcement actions. Cartels are often not limited to national markets but affect more than one country. Therefore, in the case an international cartel, a claimant may file claims in different jurisdictions.
Recently, the Commission drafted new legislation (a directive) that allows ‘qualified entities’ to bring claims without individually identifying all the injured parties. It also allows them to facilitate actions in countries other than the place of the reviewing authority, and promotes access to evidence while protecting leniency information. The definite text of the directive is currently under internal discussion in the Commission and it is unclear when it could enter into force.
A Dutch perspective
The question is whether a private enforcement action in the Netherlands could be (relatively) successful. Unsurprisingly, in order to enforce the claim legally in the Netherlands, it has to fall within the jurisdiction of the Dutch court. In addition, the applicabilty of Dutch law is relevant. The following rules are important in this respect.
Jurisdiction and applicable law
A Dutch court will assess its jurisdiction on the basis of Regulation 44/2001. In general, the court has jurisdiction when the harmful event occurred in the Netherlands or the defendant is domiciled in the Netherlands. The applicable law is decided on the basis of Regulation 864/2007. Moreover, the law applicable is the law of the country where the market is affected by the restriction of competition.
Legal basis
Actions for damages for breach of antitrust rules are usually brought under the same rules and principles as actions for recourse based on tort or on unjust enrichment. According to Dutch law with respect to tort, in cases involving several offenders, all members of the group shall be jointly and severally liable if one out of the group of persons unlawfully causes damage. The risk of causing damage should have restrained such persons from their collective conduct, and they can be held accountable for such conduct. In this respect, members of the cartel are, in general, jointly and severally liable for the entire damage.
In addition, established case law states that if a parent company exercises ‘decisive influence’ over the commercial behaviour of its subsidiary, then both form part of the same economic undertaking and, therefore, both can be fined for a competition law infringement. It is irrelevant whether the parent company was itself involved in the infringement. However, such automatic liability for a parent company is not assumed in a private enforcement action.
Collective action
According to Dutch law, representative bodies may bring claims but may not seek monetary compensation. However, a foundation or association may bring collective actions on behalf of injured parties seeking a judicial declaration that a company is liable for the damage it has caused. In addition, it is also possible to assign the individual claims to a foundation or association. This foundation or association, as holder of the individual claims, can initiate an action seeking damages with respect to the individual claims and arrange, for example by financing the action.
Class Action (Financial Settlement) Act 2005
The Dutch Class Action Financial Settlement Act (Wet Collectieve afwikkeling massaschade) 2005 facilitates the collective settlement of mass damages. If a settlement agreement has been concluded between a foundation or association and one or more other parties that have committed themselves by this agreement to pay compensation for this damage, the court may, at the joint request of the parties, declare this settlement binding on persons to whom the damage was caused.
However, the declaration that the agreement is binding shall have no consequences for a person entitled to compensation who has notified in writing, within a certain period, that they do not wish to be bound.
Evidence
Evidence is the life-blood of an effective private enforcement action. In the Netherlands, the burden of proof rests with the claimant who has to state the facts that constitute the infringement.
Pre-trial hearings of parties and witnesses can be held before a main proceeding is initiated. It is within the court’s discretion to allow an immediate provisional hearing of witnesses, with no opportunity to appeal. Such pre-trial hearing can be useful if a claimant doubts if it has enough evidence to bring a case. It is not necessary to initiate a main proceeding afterwards.
In addition, the Dutch Code of Civil Procedures allows pre-trial discovery of documents. In this respect, a claimant that has a legitimate interest can request inspection, copies or extracts of documents related to a legal relationship to which they are a party.
It is relatively inexpensive and easy to obtain pre-judgment attachments in the Netherlands, in order, for example, to secure recourse. Immoveable property can be attached as well as bank accounts and tangible property. The claimant has to file a petition with the court, which includes an explanation of the basis for the claim and the amount of the claim. An order of attachment is usually given in ex parte proceedings if the requirements of attachment have been met.
Dutch examples
In view of the above, the question remains if examples exist of successful private enforcement actions in the Netherlands. In the following examples, parties often reach an amicable settlement out-of-court.
Dutch construction fraud
One of the biggest scandals in the Netherlands in recent years was the Dutch construction fraud when the Netherlands Competition Authority (NCA) fined almost the entire Dutch construction industry because of bid-rigging.
Afterwards, construction companies faced private enforcement actions of purchasers. Finally, a collective agreement (Collectieve Regeling Bouwnijverheid) between the claimants and the construction companies was concluded including a compensation amount over €70m.
Interpay cartel
Eight banks set up Interpay as a central sales office. As a result, Interpay was the only supplier of network services for PIN transactions. By doing so, the banks eliminated competition amongst themselves on this market. In addition, the NCA has imposed a fine on Interpay for charging excessive rates for the provision of network services for debit-card transactions. These are the rates that retail traders pay Interpay per transaction.
The co-ordinating body of the Dutch retail sector (Platform Detailhandel) claimed damages suffered as a result of this cartel. In the end, a collective agreement was concluded that contained a discount of 0,01 eurocent per PIN transaction and the establishment of a fund to achieve more effective payment services.
Dutch beer cartel
The Commission fined the Dutch breweries Heineken, Grolsch and Bavaria for nearly €274m for participating in an illegal cartel that primarily involved price-fixing and customer allocation.
The members of the Dutch trade association for the hotel and catering industry (Koninklijk Horeca Nederland) suffered massive losses due to this cartel. This association filed petitions to hear witnesses under oath. Currently, the parties are still negotiating.
Conclusion
As you can see from the rules and examples we’ve described, private enforcement in the Netherlands can be effective. However, claimants in the Netherlands face common problems such as the calculation of the exact amount of the damages or the passing on defence. In this respect, claimants are eagerly looking forward to the draft directive of the Commission.
By Frederieke Leeflang, partner, and Rens Kloppenburg, lawyer, Boekel De Nerée. E-mail: frederieke.leeflang@boekeldeneree.com; rens.kloppenburg@boekeldeneree.com.
?Boekel De Nerée is a leading independent Dutch law firm of advocaten and civil law notaries. Based in Amsterdam, we offer specialist advice to clients in a wide range of industries. Our corporate practice includes an Anglo-American advisory group specifically geared to serving the interests of clients from English-speaking parts of the world, providing clients with peace of mind when dealing with matters in the Dutch jurisdiction.
