What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
Under Belgian law, competition damages claims by classes of consumers and SMEs can be lodged through class actions. Such actions for collective redress are preceded by a mandatory negotiation phase which may lead to a collective settlement agreement. Such collective settlement can include parties outside of Belgium, though only on an opt-in basis. When an action for collective redress is initiated and found admissible under Belgian law, the court will set a timeframe during which the group representative and the defendant negotiate an agreement. If these negotiations lead to an agreement, that agreement will only become binding if approved by the court, which will then end the proceedings.
Furthermore, where one of the parties who could potentially act as a group representative in an action for collective redress reaches a settlement with an infringer, the parties may apply to the court to have that settlement approved and declared binding on all potential claimants without the need to first bring collective redress proceedings. However, potential claimants from outside Belgium can again only be bound if they opt in to that settlement agreement.
Settlement of claims filed by the Public Prosecutor take the form of a Conduct Adjustment Term (“Termo de Ajustamento de Conduta”, in Portuguese). Settlements on a pending judicial case must be approved by the judge, but revision of the terms of the settlement is unlikely to occur.
As indicated in Question 11, China has a collective and representative action regime in civil actions. Collective settlements may be available in the context of collective and representative actions if all of the plaintiffs approve of the settlement.
Given that the settlement in the collective and representative action will be binding upon merely the plaintiffs approving such settlement, parties outside of PRC who have not participated in the legal action as plaintiffs in the first place (and hence have not approved the settlement) may not be covered.
Class actions are only recognized under Egyptian law in consumer protection cases. However, neither the ECL nor the ECC allow for class actions in competition damages claims. Having this in mind, there is nothing in the law to prevent collective settlement of competition damages claims. This settlement may include parties outside of the jurisdiction provided that their claims are substantiated.
Collective settlement of competition damages claims can be negotiated in the context of a class action. Only authorised consumer associations are entitled to negotiate such settlements (article L. 623-22 of the consumer code).
Once a settlement has been reached by the parties, it must be approved by the court, which ensures that the settlement complies with the interests of the consumer class and makes it legally enforceable (article L. 623-23 of the consumer code).
The model action for a declaratory judgment (see question 11) allows a collective settlement of competition damages claims. Nevertheless, only parties that have registered their claims beforehand are included and each claimant still has to exercise its own rights, ie approach the infringer individually.
In standard competition damages litigation, collective settlements are not provided for under German law. Though, it remains possible to conclude settlement agreements with more than one infringer, this is highly unlikely since every cartelist has a valid interest in keeping the terms of a settlement, even the settlement itself, confidential. Hence, claimants usually settle the dispute with each cartel member individually in relation to their market share (whilst threatening to invoke joint and several liability).
No mechanism for the collective settlement of competition damages claims is available under the Competition Ordinance. There is, however, nothing to prohibit parties from voluntarily doing so.
A class action suit is managed on behalf of the class and the Class Action Law stipulates that a group of persons may collectively file a class action on the legal ground of Competition Law. In practice, many class actions are filed on the grounds of the Competition Law, and in particular, recently many class actions are filed on the grounds of excessive pricing and international cartels.
Very often class actions terminate with a collective settlement which must be approved by the court, in lieu of a full legal proceeding. The settlement relates to all the members of the group, that is, anyone who has a cause of action before the date of approval of the class action, the mechanism being opt-out and not opt-in.
The settlements may include parties outside of jurisdictions as long as extraterritorial jurisdiction has been acquired by the Israeli court (see question 7).
As discussed in Question 11, while the group action and appointed party mechanisms for aggregating competition damages claims do exist, there is no special procedure in place for collective settlement.
The Dutch Act on Collective Settlement of Mass Damages Claims (Wet Collectieve Afwikkeling Massaschade) (“WCAM”) facilitates the collective settlement of mass damages claims. Under WCAM, the interests of a group of parties which suffered damages (e.g. by an infringement of competition law) can be represented by a Representative Organisation, which may be the same entity that initiated a collective action. Should the Representative Organisation subsequently agree to a settlement with the party which infringed e.g. competition law regarding the compensation payable to the parties who suffered damages represented by it, they can file a joint petition with the Amsterdam Court of Appeal to declare the settlement agreement collectively binding. Provided that the requirements under WCAM for a settlement agreement are met, the Amsterdam Court of Appeal will declare the settlement agreement collectively binding. Notification of the judgment and of the possibility to opt out of the settlement agreement within a certain period of time (which must be at least three months), is then sent to the parties which suffered damages. The parties which do not opt out are bound by the settlement, articles 7:907 and 908 DCC.
Under the newly approved Collective Damages Act is also room for settlement. After the court decided on the appointment of an “Exclusive Representative” (the organisation which represents all parties which have suffered damages), the scope of the action and the definition of class of parties which suffered damages and gave these parties residing in the Netherlands the possibility to opt out and these parties who are not domiciled in the Netherlands to opt-in, the court will set a term for the parties to try to reach a settlement. If no settlement has been reached the proceedings will continue. Before reaching a decision, the court may order both the “Exclusive Representative” and the defendant to provide it with a proposal on the collective settlement of the damage, which it may use to determine the damages allocated to the parties which suffered damages.
The PCA does not expressly provide for such a mechanism. In the absence of case law at this time, under Philippine law, parties are generally free to settle any claim they may have against any other party, as long as the settlement is not contrary to law, morals, good customs or public policy. Consequently, a settlement agreement may encompass competition damages claims, including as against those parties outside the Philippines.
There is no specific mechanism provided for collective settlement of competition damages claims. If a settlement is concluded outside of court proceedings it could include parties from any jurisdiction.
The injured party may choose to settle with one of the co-infringers who are jointly liable for the damage. In such case, the injured party may demand compensation from the other co-infringes in the amount reduced by the part corresponding to the amount that the settling co-infringer would have been liable for if it was not for the settlement. Unless the settlement agreement states otherwise, the settling co-infringer is not released from joint and several liability for the entire damage that has occurred in cases, where the claimant cannot recover the damages from the other ‘non-settling co-infringers’. In such cases, the claimant is entitled to recover the damages also from the infringer with whom the settlement was signed, and such a co-infringer retains the recourse rights against the others.
According to a general class action regulations in order to settle a class action before court more than half of the members of the group that were party to the proceedings must agree to a settlement. Where admissible, the court shall procure reaching an amicable settlement by the parties, for instance in form of a mediation. Any court settlement must be signed by the parties and reflected in the minutes of the hearing. Such settlement would include all members of the group.
Portuguese law does not provide for any particularities in respect to collective settlement, which is allowed in general terms, being subject to the homologation of the court.
The only specificity in collective actions is that the Prosecutor may replace the claimant in case of discontinuation of the claim.
Permission is not required from the court to settle any action before trial. During trial, parties can request the court to rule admitting the settlement. There are no cost implications.
There is no specific regime for class actions, unless they involve a consumer law infringement. If the consumer law is involved prior to settle an agreement the Public Prosecutor must agree with the terms of the agreement and the court must issue a ruling homologating it.
A settlement validated by the court would not include parties outside the court’s jurisdiction since said settlement would not be enforceable as the court lacks jurisdiction.
Collective settlements require judicial authorisation, the court must approve any settlement entered into by the plaintiff on behalf of group members of a class action. A collective settlement can include parties outside of the jurisdiction if they are members of the class action. Such approval will be given unless the terms of the settlement are unreasonable or discriminatory.
Neither the Turkish competition law regime nor the civil procedure legislation includes any mechanisms designed for collective settlement of competition damages (or other) claims.
Mechanism for collective settlement
Class actions can only be settled or discontinued with the leave of the Federal Court. The Court will only approve a settlement if it is satisfied that it is fair and reasonable, taking into account the interests of the group members who will be bound by the settlement agreement and whether the proposed settlement has been undertaken in the interest of group members as well as the claimant and defendants. Settlements can include parties outside of the jurisdiction.
The Federal Court has emphasised that there is no exhaustive list of factors that must be satisfied in order to approve a settlement. However, the following factors are relevant:
- the complexity of the matter;
- the duration of the litigation;
- the stage of the proceedings;
- the prospects of successfully establishing liability;
- the prospects of recovering damages;
- the prospects of an appeal;
- whether any of the group members are opposed to the settlement;
- whether the terms of the settlement agreement would have an adverse effect on any group members;
- whether any adverse effect is balanced by a proposed benefit;
- any adverse effect of funding or other difficulties that was not disclosed to group members;
- any conflicts of interest.
The above factors must be considered in light of the 'best case' recovery.
Settlements are typical in competition damages claims. These settlements must be perceived as fair and reasonable to the class members. To ensure that settlements are fair, subsection 29(2) of the Class Proceedings Act provides that a settlement of a class proceeding is not binding unless approved by the court. It is the judge’s responsibility to determine whether the settlement is fair and reasonable at a settlement hearing. The court in Dabbs v Sun Life Insurance Co of Canada (1998), 40 O.R. (3d) 429 set out a list of considerations for the approval of a proposed settlement, such as whether the settlement is recommended by class counsel, the risks of proceeding to trial, and whether the settlement has been approved in other jurisdictions.
By the time settlements are entered into, foreign defendants will have typically attorned to the jurisdiction.
Private settlements are always available to the parties with no specific requirements or mechanism that need to be complied with therefore they can involve also parties outside of the jurisdiction.
Under Romanian law there is no special mechanism governing the collective settlement of competition damages claims. At the same time, there is no legal impediment against either (i) collective settlement, or more in particular, (ii) collective settlement including parties outside of the jurisdiction.
Thus, such mechanisms could in principle be enacted in practice.
Collective settlement is possible under the CAT’s collective actions regime (see question 11). A collective settlement must be approved by the CAT in order to be binding, which it will do if it is satisfied that the settlement terms are ‘just and reasonable’, having regard to the size of the class covered by the settlement, the amount and terms of settlement, the likelihood of a higher amount being awarded at trial and the likely cost and duration of trial. In assessing this, it may have regard to submissions by the parties’ experts, legal counsel and any individual class member.
The settlement can include parties outside of the UK, provided that they have opted in to the proceedings.
As a general rule, each entity or individual accountable for the damage needs to settle with each victim, notwithstanding the possibility to reach a joint settlement approved by all the parties. A settlement reached by one victim or one defendant, will not be binding for other victims or defendants.
Nevertheless, if the defendants are part of a joinder (litisconsorcio), which might happen if they are jointly and severable liable, the settlement reach by one of them will benefit the others. This rule does not apply if the joinder is voluntarily formed.
One mechanism to achieve a collective settlement of competition damages claims is a class action settlement. Class action settlements are governed by Rule 23 of the Federal Rules of Civil Procedure, and must be approved as fair, reasonable, and adequate by the judge before they can bind absent class members. Under Federal Rule of Civil Procedure 23(a), a class can be certified for settlement provided that certain elements are met, including (i) that the class is sufficiently numerous for collective treatment; (ii) the claims of the named class members are sufficiently common and typical of the claims of the class as a whole; and (iii) class counsel can adequately represent absent class plaintiffs. Plaintiffs must also show that ‘questions of law or fact common to class members predominate over any [individual questions] and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.’ Fed R Civ P 23(b)(3); see also Wal-Mart Stores, Inc v Dukes, 564 US 338, 361-65 .
Such settlements may include parties outside of the jurisdiction. The Supreme Court has held that absent plaintiff class members suffer a less imposing burden in an out-of-state class action than do defendants. Phillips Petroleum v Shutts, 472 US 797, 811 . Thus, the absent class members are not required to have the ‘minimum contacts with the forum’ state that would otherwise be mandated for a state to have ‘personal jurisdiction over [an out-of-state] defendant.’ Id. Moreover, for a court to have jurisdiction over absent class members, they are not required to ‘affirmatively consent,’ or ‘opt in’, to its jurisdiction. Id. at 811-812. In damages class actions, the only requirement under the Due Process Clause is that the absent class members be afforded the ability to opt out of the litigation. Id. at 811-812. Thus, so long as absent class members are afforded notice of the action, notice of their rights, and informed that they can choose to opt out of the class by ‘returning an “opt out” or “request for exclusion” form,’ a court properly exercises jurisdiction over all class members who choose not to opt out. Id. at 812. Thereafter, a court-approved settlement will be binding as to those absent class members. Id.