What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
A few important developments can be expected in Belgium. First of all, the first actions for collective redress for competition damages are very likely to be launched in the next few years. Indeed, when the regime was first introduced in 2014, it only applied to claims which arose as of the entry into force of that act. Hence, only competition infringements which have been discovered since then will be grounds for actions for collective redress.
Second, we are already seeing a trend towards competition damages claims becoming part of the general strategic toolbox of large companies, which use those claims as leverage against each other. This trend is likely to continue, possibly due to the fact that this type of litigation is often quite complex and therefore requires considerable funds and extensive assistance of specialised lawyers and economists.
Finally, as of June 2020, a new type of competition infringement will be introduced into Belgian law, prohibiting the abuse of economic dependence. The new law intends to tackle abuses in unbalanced relationships between enterprises. As a result of this law, companies imposing conduct or terms that could not be obtained under normal market circumstances on economically dependent companies will risk both being fined by the Belgian Competition Authority and being sued for damages by anyone harmed by their behaviour.
Significant changes affecting competition litigation are expected in the near future, as a result of the discussions regarding a number of bills aiming at fostering private competition litigation in Brazil.
The most relevant one is the Bill 11.275, 2018, which is currently being processed under the Brazilian House of Representatives, having already been approved by the Senate.
The main changes proposed by such Bill are: (i) double damages for those harmed by a cartel infringement - except the lenient and the committing party of a Cease and Desist Agreement; (ii) exemption for the offender who is party to a cease-and-desist or leniency agreement from the payment of damages caused by other members of the cartel; (iii) no presumption to passing-on of overcharges, which must be proven by defendants; (iv) application of a 5-year limitation statute, counted from acknowledgment by the claimant of the infringement or damage suffered, which is presumed to occur when CADE issues a final decision on the case; (v) CADE’s decision can give grounds for evidentiary relief, and base a request for injunction by the claimant.
- Starting from January 1, 2019, the SPC is responsible for the appeal of competition litigations, which reflects the efforts of PRC judiciary to enhance the uniformity of AML application and to improve adjudication quality in private competition litigations. As such, it is likely that more influential competition cases will appear in the next five years.
- Economic analysis reports will play an increasingly important role in future competition litigations, and the judges will give more focus on such reports during court hearings.
- The methodology for damages calculation is important. With a precedent more favourable to the plaintiff, people may be incentivized to bring more competition damages cases.
One of the most anticipated developments as regards competition litigation is the formation of a separate specialist Commercial Court in Cyprus which shall be competent to hear cases from a certain value upwards. Furthermore, the implementation of the electronic justice project court-wide and the revision of the Civil Procedure Rules which date back several decades are expected to have a meaningful impact in expediting the judicial process.
Enforcement approach of the ECA in recent years shall lead to increasing number of competition cases and accordingly the possible increase of competition damages claims cases.
Another significant development may be the introduction of class actions in competition damages claims.
The most significant development affecting competition litigation in the coming years will be the effective application of the new provisions that were introduced into French law as part of the implementation of the Damages Directive.
Such provisions will ease the burden of proof on claimants and will probably encourage victims of competition law infringements to take more lawsuits against cartelists or undertakings that have abused their dominant position.
However, it remains to be seen how the damage quantification issue will be dealt with by the French courts. It should be noted that the provisions introduced into French law as part of the implementation of the Damages Directive have not really resolved this issue. Nevertheless, the two following non-binding guidelines published by the Commission should help courts in this respect:
- The Communication from the Commission dated 13 June 2013 on quantifying harm in actions for damages based on breaches of Article 101 or 102 of the Treaty on the Functioning of the European Union. This communication aims at providing practical guidance to national courts in the evaluation of antitrust harm on a case by case basis.
- On 1 July 2019, the Commission published the final version of its Guidelines for national courts on how to estimate the share of overcharge which was passed on to the indirect purchaser. These guidelines are meant to provide practical guidance to national courts on the relevant parameters that can be taken into account when dealing with economic evidence for assessing the passing-on of overcharges, including the relevant economic theory and methods for the purpose of quantifying the passing-on effects (see above the answer to Question 12).
Due to the repeated legislative measures to promote private enforcement and the courts’ claimant-friendly case law, Germany is for good reason one of the favoured venues for cartel damage litigation. Due to an increasing number of (claimant) law firms - inter alia, the main players in the US have entered the German market - cooperating with process financiers and marketing cartel damage claims bundled by way of assignment and with view to the upcoming Brexit, a further boost can be expected.
With regard to German substantive law on cartel damage claims, the courts will likely further reduce legal uncertainty over the next years, particularly in the context of the several hundreds of claims that are pending in connection with the sugar and truck cartel. Yet, it remains to be seen whether there will be alternatives regarding the collective enforcement of antitrust damages. So far, the model action for a declaratory judgment is only applicable in the B2C area and only qualified associations can act as a claimant so that the new instrument has a limited scope of application in competition damages proceedings. Furthermore, the intended EU collective action is set to exclude competition law from its scope of application. Small and medium-sized enterprises in particular, are therefore likely to frequently resort to litigation vehicle to enforce their cartel damages claims.
We expect the introduction of standalone private actions will be the most significant development affecting competition litigation in Hong Kong in the next five years. Support for such introduction has already been voiced by the Competition Commission and some legislators. As at the date of writing, the issue of introducing standalone private actions is still being considered by the Hong Kong Government – and we expect to have an indication of their position within 2019.
2019 was a significant year for the Israeli competition law. On January 2019 the Israeli Parliament passed a comprehensive amendment to the Competition Law, which led to significant changes in a number of fields such as monopolies, the obligation of company officials and more. At the same time, there has been significant developments in the case laws. We anticipate that the new laws and case laws may lead to a significant increase in competition litigation, in particular class actions, alongside significant development of the existing case laws in the field.
- Excessive pricing class actions – in recent years, many class actions were filed on the grounds of excessive price: The price collected by the Israel Electric Corporation from its consumers for natural gas; prices of Tnuva Cottage Cheese and hard cheese; potash prices collected by the Dead Sea Works; prices of dairy milk manufactured by Tnuva and Strauss-group; prices of Nespresso capsules; and more.
In January 2019, two decisions regarding excessive pricing were published simultaneously by the District Court: the first, regarding excessive pricing of Coca Cola bottles sold in Israel by CBC group; the second is regarding excessive pricing of cocoa powder for domestic consumption, sold by Strauss-group. While the first class action regarding Coca Cola was approved, the class action regarding cocoa powder was denied.
Although it is not the first time excessive pricing class actions were discussed by the Israeli courts, it is the first time that reasoned decisions were published that outline guidelines and criteria for the analysis of excessive pricing. As stated, the decisions were published during a period in which there is already a significant increase in class actions related to excessive pricing. Therefore, we anticipate a significant increase in such class actions and significant developments in competition litigation in that field.
- Competition litigation in the field of monopoly violations – One of the significant amendments was to the term “Monopoly”, to include entities which possess significant market power. In the previous version of the Law, the definition of the term “Monopoly” was determined solely by the market share test – any entity which supplies or acquires more than half of a relevant market is a monopoly. The amendment expands this definition, which now includes firms that possess significant market power. Namely, a firm can be deemed a monopoly even if its market share does not exceed 50%.
- Competition litigation against company officials – as part of the comprehensive amendment to the competition law, company officials are now obligated to supervise and act within their power to prevent violation of the Law. Officials who violate the Law are now subject to criminal and monetary sanctions.
Under the Law, company officials (defined by the amendment to the Law as any active manager in the company, partner - excluding limited partners, or company nominated official responsible for the field in which the violation occurred) must supervise and act to the full extent of his power in order to prevent a violation of the Law by the company or one of its employees. The Law states that if an offense was committed under the Law by the company or one of its employees, the company official will be held in violation of this obligation, unless he can prove he acted to the full extent of his or hers power in order to uphold its legal duty. A company official who fails to uphold this obligation will be subject to a year in prison alongside the monetary fine detailed by the Law.
This amendment completely transforms the scope of the company officials' obligations: while previously company officials' liability was derived of the company's violation of the Law, under the new Law there is now an independent offense of lack of supervision and failure to employ the full extent of the official's power to prevent the violation of the Law.
- Increase in International cartel class actions – following the courts latest decisions regarding Regulation 500 in connection with international cartel class actions, as mentioned in question 20 above, we anticipate an increase in this kind of class actions, as well as development of the existing law and the analysis of international cartel cases and extraterritorial jurisdiction.
The AMA was amended in June 2019 (but not yet effective at the time when we write this article), and a new system was adopted by the amended AMA, in which the JFTC may more flexibly reduce the administrative surcharges to be imposed on leniency applicants, except for the first applicant which will continue to receive a 100% reduction, in accordance with the degree of their cooperation with the investigations. In addition, for the purpose of promoting the leniency applicants’ cooperation with the investigation, a system similar to attorney-client privilege was introduced–investigators will not access documents stating the contents of confidential communication between the client and attorney regarding legal advice, especially for cases concerning price-fixing cartels and bid-rigging.
While there have been a number of court cases where public entities have pursued claims for damages against parties that engaged in bid-rigging in connection with public works or procurement in Japan, there have been only a few court cases where companies having ongoing businesses relationships with violators of the AMA initiated competition damages litigation.
As we are not aware, at this time, of any specific movement aimed at promoting competition damages litigation, it does not appear to us that there will be major developments in the field of competition litigation in the coming five years.
The Netherlands is an increasingly popular forum for litigating competition damages claims. We expect this to continue, certainly with the Mass Claim Settlement Act entering into effect (expected second half of 2019). Under this Act, it will be possible for representative organisations to claim damages for a group of injured parties, rather than only declaratory relief such as currently is the case. Until such time, we would expect the pre-existing litigation model based on the assignment of claims to a litigation vehicle to continue to be applied by litigation funders and their lawyers.
Competition law enforcement, more so private enforcement actions, are an emerging field of law in the Philippines. Practitioners certainly look forward to the first Section 45 civil action, as it will clarify several outstanding procedural and substantive issues, among others as to the nature of the action (ie, can it be based on tort?); the powers of the court vis-à-vis the PCC, particularly on the scope of disclosure; applicable defenses (such as passing-on); and available remedies and recoverable damages.
Practitioners are likewise looking forward to the first administrative and criminal cases involving cartels and how the PCC / the courts would deal with such cases The PCC is also expected to release its rule on inspections / dawn raids, which will surely have a significant impact on competition law enforcement in the Philippines.
The Polish Private Enforcement Act has introduced a number of solutions that should facilitate seeking compensation from competition law infringers through private enforcement. New discovery rules, the presumptions and reversed burden of proof together with the availability of class actions and other simplified procedures introduced under the Polish Private Enforcement Act may increase the popularity of competition damages cases. Importantly, the Act introduces new possibilities to pursue redress for indirect damage, which makes room for new claims, previously not available under the general rules.
As the new regulations apply to a broad range of competition law infringements and the OCCP’s activities that will largely determine the future caseload.
Lastly, it should be mentioned that significant changes to the Polish civil procedure are on the horizon which may significantly affect competition damages litigation in the close future. The final version of draft is not yet passed but it is expected it should entered into force around October. The future civil proceedings will introduce many arbitration-like solutions in terms of the conduct of the hearing, but will also separate commercial proceedings, which will be governed by stricter and formalistic rules that could impact competition damages cases.
We believe that the procedural changes brought by Law 23/2018 will substantially increase the number of claims and actions for damages based on competition law infringements. However, it cannot be excluded that the likelihood of a substantial increase in litigation resulting from damages claims may have as indirect effect a decrease in the number of leniency applications, since leniency applicants are not granted immunity from civil claims.
Bearing in mind how the Portuguese regime has been shaped, we may also anticipate that most of those claims will most likely be shaped as follow-on actions, i.e., claims occurring after a definitive decision is issued by the Portuguese Competition Authority. Thus, it should be highlighted that both the number of cases and the success of private enforcement litigation will be inherently associated to the intensity of public enforcement by the Portuguese Competition Authority, and to the types of cases the Authority will pursue.
Additionally, ECJ case law will also be a valuable tool in order to fully understand the exact extent of some concepts introduced by Law 23/2018.
The current Competition Law came into force recently (on 24 may, 2018) and incorporates the possibility of requesting a civil fine (punitive damages) that will be established for the claimant’s benefit. We are of the opinion that this civil fine will increase the class actions’ claims, specially those filed claiming for consumers’ rights.
In this sense, we may expect in the next five year a class actions proliferation seeking damages based on antitrust violations.
Currently, most infringements have been established by the courts fall under the old rules on limitation. We therefore foresee more damage cases during the coming years, which fall under the new limitation rules.
However, one important first step for competition litigation in Sweden would be to see more successful case-wins for the Swedish Competition Authority, which over the past years has seen several defeats and a lower investigatory activity.
Following that it would be an important move forward if there would be a first broadly recognized successful damages case. This would probably require a general change of attitude in the Swedish business community to the effect that seeking damages is a viable option that will not damage important business relations going forward. Moreover, a first successful class action for antitrust damages could open up for more such cases, which currently is not generally perceived as an interesting option for Swedish companies or consumers suffering direct or indirect damages for undertakings’ breach of the competition rules.
Due to the recent trend of the Patent and Market Court's judgments being annulled after an appeal before the Patent and Market Court of Appeal, in the favour of the defendant, we believe that companies on the defendant side will be more inclined to go through an appeal process.
The Turkish Competition Board's 2013 banking cartel decision concerning 12 prominent banks (dated March 8, 2013 and numbered 13-13/198-100 "12 Banks Decision") raised the awareness level of competition damages claims in Turkey. A large number of competition damage actions concern the Turkish Competition Board's 12 Banks Decision, and at least one plaintiff was awarded damages in a consumer court as a result of a claim based on the relevant decision.
In the abovementioned case, the consumer court awarded damages based on the 12 Banks Decision after the Council of State upheld the relevant Board decision. The Council of State then reassessed its decision pursuant to a request of revision of decision, ruling that the Board misapplied the "single continuous infringement” concept to the case at hand and that the administrative courts should reassess the case.
The fact that the Council of State took a contrary approach to the Competition Board’s decision at such a late stage of judicial review and ended up negating the legal basis of an existing damages award may potentially have a chilling effect on future damages claims. This will also likely strengthen the current position of the Court of Cassation to wait for the finalization of the underlying decision before letting claims go through.
While the independent review of Australian competition policy, law and institutions which concluded in 2016 led to legislative amendments in 2017 designed to make private actions easier, if recent trends continue, we do not expect to see a large number of private actions brought in the next five years. The two areas where we see development most likely to occur are first, following conclusion of Australia’s first contested criminal prosecution of alleged cartel conduct which is listed for hearing in late 2019 and second, in relation to enforcement of the prohibition of concerted practices (which was also introduced in late 2017). Australian jurisprudence would benefit from at least one private action being commenced and finally determined by the courts as the judgment would provide significant insight into how the courts will approach causation and quantification of damages and assist in resolving some of the uncertainty in this area of law.
The release of the decision in Godfrey is highly anticipated and will affect a number of class actions that are currently suspended pending the release of that decision.
Because the threshold for certification is relatively low, there is increasing talk of defendants foregoing traditional certification challenges, and simply proceeding to trial or adopting other defence strategies. If that takes hold, the landscape for competition class actions might change dramatically, as many of the issues that have been decided in the abstract by Canada’s appellate courts – such as the availability of damages for indirect purchasers – would have to be determined in concrete terms on the basis of proof and evidence in fully litigated cases.
As happened recently with L.D. 3/2017, the most significant developments will probably take place at a EU level and concern the role of competition authorities with an ever-increasing integration and interaction between the proceedings carried out by them and civil follow-on actions before ordinary courts.
While local experience in competition damages cases may be limited, there is surely a growing interest for this topic.
The most relevant (public) precedent is a 2015 successful damages claim: around RON 4.2 million (approximately EUR 880,000) in damages were awarded in a claim brought by an insolvent company, Mailers Serv, against the Romanian Post by the Bucharest Court of Appeal. The judgment was later upheld by the High Court of Cassation and Justice, in November 2016.
The case was a follow-on damages claim brought by one of the companies that the competition authority found to have been discriminated by the Romanian Post in a 2010 fining decision for abuse of dominant position. In the particular case, the authority fined the Romanian Post with RON 103 million (approx. EUR 23 million).
More recently, several follow-on damages claims were filled before Romanian courts based on a sanctioning decision of the European Commission. Some lawyers are now overtly promoting such claims. Moreover, the President of the RCC publicly declared on repeated occasions that the implementation of the Damages Directive could also represent an effective means for public authorities to claim damages for the harm incurred following breaches of competition law.
Thus, a rise in the number of competition damages cases is to be expected, especially since the competition authority became more active over the past years, focusing on large cartel and dominance investigations, which are the types of infringements that are most likely to give rise to damages claims. By way of example, a total of 16 investigations were commenced in 2018, out of which 13 refer to potential cartels or dominance abuses.
The collective action regime, which was introduced to address a gap in the effectiveness of private enforcement for consumers and other smaller claimants, has the potential to transform the competition litigation landscape. Although the regime has had a slow start, it is now starting to gain in momentum. The CPO application in the Merricks case (see question 11 above) is set to provide important guidance for future class representatives and their funders. If the Court of Appeal’s ruling in that case is upheld, it should encourage claimants and funders to use the regime.
The success of the new regime is not all bad news for potential defendants, as the new collective settlement regime introduced alongside it (see question 20 above) provides a potential route for achieving finality of settlement with the entire class of litigants far more efficiently and effectively than is possible if claims are pursued separately.
There have been discussions and more cases regarding these matters that might entail developments on the mechanisms for the determination of methodology for the damages’ estimation.
Additionally, the precedent on competition litigation and damages claims in general, might help in the application of a compensatory damage principle according with the damage can be compensated through the restitution of the benefit received by the accountable entity.
Finally, we expect that via regulation and precedent, we will have development on punitive damages.
An increasingly active EU Competition Commission and the growth of damages actions in the EU and elsewhere will likely have spillover effects in other jurisdictions like the US. Additionally, US lawmakers have expressed interest in scrutinizing the competition landscape of major technology and health care companies, which will likely lead to a rise in private litigation in those sectors.