What, in your opinion, are the main obstacles to litigating competition damages claims?
Generally speaking, there are no major obstacles to litigating competition damages claims in Belgium. This does not, however, mean that Belgium is a victim-friendly jurisdiction. Specifically, the burden of proof rests on claimants, which cannot rely on a general system of discovery which would allow them to easily obtain relevant documents from the alleged infringer.
The absence of any specific hurdles is evidenced by an increasing growth in the number of competition claims in the past two decades. Most of that growth was in the form of cease-and-desist actions and actions for the nullity of contractual clauses, but there has also been an increase in competition damages claims. While these claims have led to both positive and negative results, a negative outcome is often not caused by any important obstacles inherent to the Belgian legal system, but rather by a failure on the side of the claimant to make the efforts required to prove the infringement or the actual damage resulting from this infringement.
Currently, claimants face a significant difficulty in obtaining evidence (i) to prove the existence of an anticompetitive conduct, and that they were victims of such conduct, and especially (ii) to quantify the damages suffered, which is a requirement to the compensation award.
Since the AML became effective in 2008, the number of competition damages claims has been on the rise. However, China is still confronted with some obvious obstacles to litigating competition damages claims.
(a) First, the burden of proof in competition damages claims is still largely on the plaintiff. In practice, it is extremely difficult for a plaintiff to prevail in competition damages claims due to a lack of a discovery process under PRC laws and a lack of necessary resources for the plaintiff to collect sufficient evidence compared with the competition authorities.
(b) Second, the operable rules applicable to competition damages claims are still absent. For example, the assessment framework for damages calculation remains to be established.
(c) Third, the competition damages claim is in its nascent phase, and thus there are few case precedents available for reference.
(d) Fourth, the PRC laws do not provide punitive damages for competition damages claims. In combination with a low chance of prevailing in such claims, claimants generally lack a strong incentive to bring such lawsuits.
The main obstacle to litigating competition damages claims is the slow judicial process. Based on the procedures as set out in the Civil Procedure Rules, claims below €3,000 can be concluded within 1-2 years whilst claims over €3,000 could take up to 5 years or more for a judgment to be issued. Alternatively, due to the time delay and legal costs parties are deterred and may seek remedies at the CPC process instead.
Lack of competition damages claims awareness, which makes harmed persons unaware of their rights to have recourse in courts against defendants of anti-competitive practices. Another obstacle is the lack of competition experts who are capable of examining the causal link and quantify the damage that is directly related to competition breaches.
As a preliminary, French courts have generally adopted a claimant friendly approach in competition damages cases. For instance, some courts already applied presumptions introduced by the provisions implementing the Damages Directive into French law (see above the answer to Question 8) even before the Damages Directive entered into force (see e.g. Paris Commercial Court, judgment of 16 July 2012, Saint Gobain a.o v. Randstat, No. 2012013030; Paris Commercial Court, judgment of 30 March 2011, Numéricable v. France Telecom, No. 2009073089, Versailles Court of Appeal, judgment of 24 June 2004, Vérimédia, No. 02/07434).
However, even if competition damages claims have significantly developed before French courts, there remain obstacles to litigating these claims in France. The main ones are as follows:
- As mentioned above, the provisions that were introduced into French law as part of the implementation of the Damages Directive, and which tend to facilitate the compensation of victims suffering from anticompetitive practices, do not apply to infringements of competition law that occurred prior to 11 March 2017. Thus, in theory, claimants still have to establish the existence of an infringement of competition law, of a damage, and of a causal link between that infringement and this damage. Although French courts now tend to relax this heavy burden of proof, it has proven difficult for claimants to bring evidence of all three elements;
- In particular, and although this is not specific to France, it remains difficult for claimants to quantify their losses. First of all, parties need to hire economic experts whose services may be costly. Secondly, and in particular in follow-on damages claims, the parties have to gather very old data which are sometimes no longer available. Indeed, FCA proceedings as well as the appeal process regarding the FCA decisions may last for several years. Therefore, competition damages actions will usually be initiated more than 7 or 8 years after the facts occurred;
- The length of the procedure of these competition damages actions (which can last up to 2-3 years just for the first instance) can discourage victims of anti-competitive practices from introducing damages claims; and
- Class actions have so far not been successful to compensate end-consumer victims of anticompetitive practices.
One of the main obstacles is the workload of courts and in general the personal and technical staffing of court divisions and registries. At present, divisions face a heavy workload, even if the situation varies significantly between the different German states. Not every court can handle complex, multi-party cartel damages actions efficiently and fast. The number of cases has reached an unprecedented level by virtue of the sugar and truck cartel recently. On the other hand, the overall quality of German courts is still very high compared to other jurisdictions.
Furthermore, German law on cartel damages is characterized by constant legislative changes without conclusive transitional provisions. It must therefore be expected that it will (again) take numerous years until relevant cases have been brought before the BGH to finally decide on the issues (eg, the temporal scope of application of sections 33g and 89c GWB).
In our view, the main obstacle to the development of competition damages claims is that a party with a potential competition damages claim must wait until a contravention is established by one of the local competition authorities before the Competition Tribunal. Standalone private actions are currently not available in Hong Kong.
Another obstacle is the absence of class actions in Hong Kong. Parties with potential competition damages claims must litigate separately, which may result in an inequality of arms in terms of legal representation and expertise in competition law.
The third obstacle is the lack of legal aid for competition law litigants. Without legal aid, consumers that have been harmed by anti-competitive conduct may not have the means for lodging legal actions for claiming competition damages.
The main obstacle to litigating competition damages claims are the burdens of proof (e.g., proof of cartel, market shares, market power, excessive pricing – economically and theoretically); duration of the proceedings - the procedure is very lengthy due to the complexity of the factual and legal questions and the burden on the courts in Israel; and lack of temporary injunction in competition litigation (see question 3).
The plaintiff (in the ordinary case where the burden of proof is imposed on him) must be supported by an expert opinion. In a considerable number of cases, the proof is complicated and sometimes has broad implications for the rest of the economy. Therefore, economic experts find it difficult to write a certain position knowing that they will have to write opposing positions in the future.
Moreover, the difficulty in obtaining temporary injunctions is a major obstacle to litigating competition damages claims.
For example, if a claim is made on a contractual level, according to which the agreement is a restrictive arrangement and therefore cannot be enforced, the court will order the enforcement of the contract, while the question of the restrictive arrangement will be clarified in the main proceeding, which may last years.
Where the AMA is violated in the course of a business transaction, the aggrieved party and perpetrator usually have an ongoing business relationship. In such cases, since the parties wish to maintain a smooth working relationship, it is common for the dispute to be resolved through an out-of-court settlement. Due to this preference for settlement, we do not expect that competition damages litigation will increase in the near future.
Where the aggrieved party is a consumer, as discussed in Question 11, the system for group actions is inadequate, and makes it difficult for consumers to initiate competition damages litigation.
The duration and legal costs/funding of the proceedings; the lack of data for e.g. the assessment of damages (due to the infringement having taken place a long while ago).
At this point, the main obstacle in litigating competition damages claims is the fact that Philippine competition law is still in relative infancy. As such, there is a lack of precedents and jurisprudential guidelines, which may provide guidance to judges hearing claims for competition damages. There is also a need for capacity building and training of judges that will handle competition cases.
Another obstacle is the inefficiency of litigation in the Philippines, generally. As discussed above, it may take several years before a litigation can be finally resolved, and thus may be costly and discouraging on the part of the litigants.
Due to the fact that competition damages claims still remain seldom in the Polish practice and there is a paucity of case law to refer to, one may support themselves with the general views and opinions of commentators and practitioners of both competition law and civil court litigation. One of the main obstacles to litigating damages claims would be lack of specialized economic experts witnesses able to calculate damage arising out of competition law infringements. The other aspects that may be considered as major obstacles to litigating competition damages cases in Poland are the relative novelty of the substance matter to the civil judges as well as the limited awareness of potential claimants of the availability of private enforcement actions. Also, no specialised courts were created to hear competition damages claims, whereas the existence of such a court would most likely induce the consistency of the case law.
Law 23/2018 is still very recent, thus it is not possible yet to assess its full impact. However, it is expected that this new regime, due to the procedural changes that it brings, will bring about an increase in the number of actions for damages resulting from competition law infringements.
No additional or specific obstacles can be foreseen regarding competition litigation claims. Nevertheless, the general obstacles of a damages claim may be visible in the competition damages claims, mainly the difficulties on demonstrating the competition law infringement by the defendant, the quantification of damages and the existence of a “causal link” between the infringement and the damages suffered by the claimant.
The main obstacle to litigating competition damages is that there are no precedents yet. In fact, one of the few competition damages claim was rejected by the Supreme Court due to a procedural formality. This, creates uncertainty when seeking competition damages.
The main obstacles in litigating competition damages relates to evidence; the ability to show damages and to quantify damages.
The ability to show damages is particularly difficult in situations of passing-on, when undertakings are passing on price increases down the supply chain. Consumers and undertakings to whom actual loss have been passed on have suffered harm, but if they did not purchase from the infringer, it may be particularly difficult to prove the extent of the harm.
The qualification of harm can constitute a barrier preventing effective claims for compensation. The qualification involves an assessment of how the market in question would have evolved given there had been no infringement, which implies a comparison with a hypothetical situation and thus can never be made with complete accuracy. Quantifying harm is a very fact-intensive process and may require the application of complex economic models, which is often very costly and leads to difficulties in obtaining data necessary to substantiate the claims. The availability of data is also hindered by the information asymmetry, which is normal in relation to competition law litigation and makes it difficult for claimants to obtain the evidence necessary to prove the extent of the harm caused by the competition law infringement.
Antitrust-based damages claims are a relatively underdeveloped area of law in Turkey, despite attractive features such as the possibility of receiving treble damages, a feature quite exceptional under Turkish law. We believe that the main reason is the Court of Cassation's position that a finalized Competition Board decision (i.e. one that is no longer subject to judicial review) establishing the competition law violation is required for private damages actions to proceed. As discussed above, while the Court of Cassation no longer sees a finalized Competition Board decision as a necessary element to initiate the lawsuit, this is still seen as a preliminary issue that must be completed for the private action to proceed. Given that it takes several years to exhaust the different stages of the administrative court system within the judicial review process, this means that plaintiffs can only hope for an extremely delayed recovery that curbs their appetite to devote resources to pursue these claims.
There are practical difficulties and cost associated with proving that loss or damage was caused by a particular contravention, in circumstances where cartels do not often keep documentary records. Key potential witnesses (such as current or former employees) are usually under strict confidentiality obligations and there are real difficulties in accessing any documents held by the ACCC.
The uncertainty in the law and practical difficulty in quantifying damages, in circumstances where no court has articulated a methodology on which a claimant can rely to calculate and establish the damage it has suffered, can act as a barrier to commencing competition damages claims. This is compounded by the fact that the necessary relevant documents are controlled by the contravener/s and their competitors.
The limitation period of six years from the date on which the cause of action that relates to the conduct accrued can frequently be an obstacle to damages claims. Given the difficulties in detection and investigation of potential contravening conduct, most private actions follow actions by the ACCC, which can take the better part of the six years to be resolved. This leaves a narrow window in which a competition damages claim can be filed.
In Canada, many of the issues associated with competition class actions remain unresolved. These include the following:
i. The evidentiary burden on plaintiffs at class certification;
ii. Whether discoverability applies to limitation periods under the Act;
iii. Whether “umbrella purchasers” can have valid claims;
iv. Whether defendants are jointly and severally liable; and
v. The availability of rights of contribution and indemnity.
Some of these issues are presently before the Supreme Court of Canada in Godfrey, which was argued in December 2018 and is presently on review.
In addition, Canadian courts have struggled with the practical consequences and implementation of issues that have been decided at a conceptual level. For example, the Supreme Court of Canada found in 2013 that indirect purchasers can bring competition damages claims. Litigants and lower courts are still working through how to implement that principle in actual cases.
The main obstacle lies in providing actual evidence of the competition damages suffered.
Even though recent reforms have tried to overcome this limit by providing wider disclosure powers to courts, for example by facilitating the access to the investigation or proceedings file of the Italian Competition Authority, harmed parties of anticompetitive infringements still have hard difficulties in proving their claims with documents or other solid means of proof.
Romania is yet to gather consistent practical experience in terms of competition damages cases. This may also be due to a cultural paradigm, in a country where reaching an amicable understanding was always preferred to going to court, as part of an unwritten moral code. However, recent legislative developments, such as EGO 39 transposing the Private Damages Directive may change things. The cultural patterns are also evolving and a large wave of (consumer) litigation against financial institutions (in the context of the financial crisis) in the past years has shown that Romanians’ litigious appetite is steadily increasing.
Technically, the damages valuation part seems to be trickiest part. It remains to be seen how the Romanian judges will address the “estimation” possibility that EGO 39 recently granted them against their traditional civil law education that required the claimant proving a “certain” quantum of the damage.
Another notable impediment for the potential plaintiffs is related to costs, especially the stamp duty, which is computed ad valorem, as a percentage of the claimed amount (exceeding 1%) and must be paid upfront and, of course, the cost of lawyers and economists.
There is some speculation that the uncertainty surrounding Brexit may make the UK a less attractive regime for claimants. However, most of the changes that are currently anticipated post-Brexit should not affect the effectiveness and practical advantages of the UK as a forum for resolution of competition damages claims.
After Brexit, the UK will be outside of the EU framework that currently governs jurisdiction, enforcement and choice of law in international disputes (see questions 7 and 8 above). If a deal is agreed, the existing regime will continue to apply until the end of any transitional period. In the event of “no deal”, jurisdiction will be governed by the English common law rules, which are in some respects more generous to claimants than the current rules. In a “no deal” scenario, EU judgments should still be enforceable in the UK and vice versa, although this will be less straightforward than is currently the case. The current rules on choice of law will be domesticated and continue to apply post Brexit.
In the short term, Brexit should have a limited impact on competition damages actions. Rights of action which have accrued on the basis of EU law before Brexit day will be domesticated into English law. Claimants will be able to bring follow-on damages claims in the UK after Brexit day on the basis of Commission decisions taken before Brexit day, and Commission decisions taken on or after Brexit day will remain persuasive authority for the UK courts. In addition, EU principles and case law applicable on Brexit day will continue to bind UK courts (with the exception of the Supreme Court) when considering damages claims brought after that date.
Claimants will also be able to bring claims in respect of post-Brexit breaches of EU law outside of the UK as breaches of foreign torts (which are a common feature of commercial litigation in the UK).
Aside from Brexit, the relatively high costs of lawyers and the litigation process in the UK can be a deterrent to claimants. However, this has been mitigated by the ready availability of litigation funding.
Considering the lack of precedent on this matter we have identified to main obstacles regarding litigating competition damages claims:
- There are no clear rules applicable to the determination of the damages caused. The general rules regarding proof of damages can be excessive considering that competition claims normally entail the compensation of damages caused to a group.
- Considering that there is no regulation regarding the binding nature for the judge of the decisions issued by the competition authority, there might be contradictory decisions between them.
As private antitrust claims are most often brought as class actions, plaintiffs often face hurdles at the class certification stage (for more information on the requirements of class certification, see the response to #11 above). For defendants in federal antitrust suits, the cost of expansive pre-trial discovery and the prospect of treble damages and joint and several liability, with no right of contribution, creates significant pressure to settle such claims.