Strength In Numbers: Trends In Antitrust Litigation
Strength In Numbers: Trends In Antitrust Litigation
Trucks, trucks, trucks – unless you’ve been living under a rock in the antitrust world, you’ve probably heard about, or even worked on, one of the many follow-on litigation claims related to the Commission’s 2016 cartel decision concerning MAN, Volvo/Renault, Daimler, Iveco and DAF. However, these cases represent just one example in the wave of private antitrust litigation steadily gaining traction across the UK and Europe.
Private enforcement of competition law plays a vital role in safeguarding fair market competition and providing avenues for affected parties to seek compensation for antitrust infringements. While class actions have long been a substantial feature of the US legal system, legislative change over the last decade has driven an increase in private antitrust enforcement in Europe. Notably, the EU Damages Directive (Directive 2014/104/EU) has been implemented across EU member states, and a collective proceedings regime was created in the UK by the UK Consumer Rights Act 2015.
On 20 April 2023, TransPerfect Legal Solutions held our second conference on ‘The Future of UK and EU Competition Regulation’. We were fortunate to be joined by antitrust litigation experts Daniel Hunt, Senior Associate at Freshfields Bruckhaus Deringer; Isabel Martínez, Partner from Andersen; Lucinda Cunningham, a barrister at Matrix Chambers; and Pierre Galmiche, Counsel at Aramis Société d’Avocats.
During this riveting panel, our expert speakers shared their insights into the key themes concerning the implementation and effectiveness of antitrust litigation mechanisms across England and Wales, France and Spain, and explored how this exciting landscape is set to grow even further in the future.
England & Wales: Leading the Pack with Collective Proceedings and Novel Theories
In England and Wales, the Competition Appeal Tribunal (CAT) serves as a key forum for competition claims and has witnessed various high-profile cases, such as interchange fee claims against MasterCard and Visa and a multitude of claims arising from the ‘trucks’ cartel decision. The CAT recognises three main types of competition claims: follow-on actions (where claims relate to an infringement decision by a competition authority), standalone actions (where claims alleging anti-competitive behaviour are brought independently of any infringement decision) and collective actions (which may be brought as either standalone, follow-on or a mix of the two on behalf of a class of individuals and their representative).
The CAT’s workload has increased substantially, with collective actions accounting for a large proportion of its work. In response to the challenges of this heavy caseload, the CAT has creatively exercised its case management powers – for example, creating mechanisms like umbrella proceedings to allow claims with ubiquitous issues to be grouped and heard together.
Collective actions, which can be either opt-in or opt-out, have gained prominence in recent years (and of the 31 publicly announced collective proceedings, nearly half (14) were filed just last year), but individual claims also continue to constitute a substantial number of cases. Interestingly, collective proceedings cannot proceed as of right – they require ‘certification’ from the CAT. This has changed the way people are litigating these claims, as they require additional work to be done upfront to establish a case and show the CAT how the class representative intends to prove harm on a class-wide basis. In some collective actions, a class representative can seek an award for damages without evidencing the specific damage to each class member, provided they can propose a convincing methodology for calculating the damages to the class as a whole.
Another fascinating – and unexpected – aspect of the UK antitrust litigation landscape is that the majority of collective action cases have proven to be standalone claims (18 of 31), which means they are brought independently of any infringement decision by competition authorities. Several of these claims put forward novel theories of harm before the CAT, combining antitrust infringements with other areas of law that are typically not entitled to bring collective proceedings claims. For example, the £3 billion collective proceedings against Meta alleged unfair pricing (based on a zero price) and abusive trading conditions based on an abuse of dominance. And in 2022, it was announced that litigation funding was secured for an opt-out competition claim against water and sewerage companies arising out of alleged unlawful discharges of untreated sewage into waterways, described as the first ‘environmental’ collective action.
However, it remains to be seen how successful these novel claims will be, and this is an area to keep an eye on. The CAT’s recent decision not to award certification and instead stay the Meta case might suggest the CAT wants to ensure it is not used as a springboard for cases that fail to validly allege breaches of competition law. On the other hand, the door is certainly not closed to new theories of harm, as in that same case, the CAT indicated it was willing to allow the potential class representative to ‘have another go’ at producing ‘a new and better blueprint’ for reconsideration.
Spain: Rapid Developments Driven by Judicial Support:
The Spanish courts have been playing a key role in facilitating private enforcement in recent years. Judges have been gaining experience across a number of cases in Spain, particularly cases flowing from the ‘trucks’ cartel decision, creating a thriving, antitrust litigation jurisdiction with relatively low litigation costs and claimant-friendly decisions. There has also been a judicial willingness to exercise discretion under the Damages Directive to estimate and award damages in the absence of precise, agreed quantification by the parties, which is particularly helpful given the complexities of the economic evidence. This has seen average damages in trucks follow-on claims as high as 5–8%.
In Spain, mass follow-on cases and cases based on traditional infringements of competition law were historically the most common antitrust litigation claims. There are still significant numbers of these types of cases, but more recently, judges are being more receptive and willing to hear a wider variety of cases, such as hybrid cases, being brought on novel theories of harm. This is similar to those seen in England and Wales – putting forward antitrust claims tied to consumer protection and data protection laws, for example.
However, while the Spanish courts are demonstrating a potential appetite and a willingness to hear such novel theories, they are currently denying a significant proportion of claims due to a perceived weakness in the cases.
In the Cars cartel matter, 60–70% of claims were denied because their respective representatives presented insufficiently convincing expert reports to demonstrate harm, further emphasising the importance of expert reports. Future cases may give the courts more opportunities to explore whether novel theories of harm can be successful in Spain.
Another driver facilitating the growth of antitrust claims in Spain is the new availability of litigation funding. In Spain, third-party funding is allowed, although it’s not regulated itself. Prior to claims related to the ‘trucks’ cartel decision, the cases presented to the courts were typically by large companies that didn’t need additional assistance with funding. However, in ‘trucks’ follow-on cases, a large majority of the claimants were sole traders or SMEs who didn’t have the requisite deep pockets for the long, drawn-out proceedings (particularly because of the risk of liability for adverse costs – including the other party’s legal and expert advisor fees). Consequently, in recent cases, the courts have exhibited more flexibility in permitting litigation funds and self-financing plaintiffs, or a combination of the two, to bring claims.
France: A Late Adopter with a Promising Future:
France has been a relatively late adopter of private enforcement of competition law through antitrust litigation. When it comes to private enforcement litigation, a key reason for the delay is that the general courts (where these cases would be heard) are lacking in sufficient investigative powers, funding and staffing to properly handle multiple complex, high-volume cases like antitrust claims. Another historic hurdle to private enforcement has been the French Supreme Court’s decision in the 2012 Gouessant case, where the court ruled decisively in favour of recognising the ‘passing-on’ defence, placing the burden of proof on potential plaintiffs to rebut the presumption that they systematically passed on any inflated costs to their customers. However, more plaintiffs may now be emboldened to bring claims with the implementation of the Damages Directive by France in 2017, which places the burden of proof for establishing the passing-on defence on the defendant invoking it.
For now, the most common cases heard before the French courts are follow-on claims, with next-to-no novel theories brought, due in large part to the lack of resources in the French courts. Claimants and their lawyers in France seeking to pursue new claims need to play the long game and be willing to invest time – they need to leverage the French Competition Authority (FCA) and their investigative powers by filing a complaint with them. Then, the FCA will either perform a dawn raid or mandate an RFI, which may result in an infringement decision allowing the hopeful plaintiff to finally file for follow-on damages.
However, there may be potential for an increase in standalone cases in the future, thanks to the emergence of third-party funding and a recent EU directive designed to empower competition authorities to be more effective enforcers. Prior to the ECN+ Directive (Directive (EU) 2019/1) implemented in France in 2021, the FCA was required to take a view and produce a decision based on merit for every case that came before them. But in late 2022, as a result of the implemented ECN+ Directive, the FCA exercised its new right to reject a complaint concerning the alleged abuse of a dominant decision by La Poste due to a lack of priority given the limited economic impact and the FCA’s limited resources. Some commentators believe this decision proves there is the space and need for standalone cases, as would-be claimants cannot rely on the existence of an FCA infringement decision.
The Road Ahead:
This is a thrilling area to be practising in and one to watch, as notwithstanding the recent boom in cases, the private enforcement of antitrust law remains a relatively new field across Europe with fresh case law being created every year. This is also undoubtedly an important area, as the private enforcement of competition law is recognised as a critical aspect of promoting fair market competition and ensuring affected parties can seek appropriate compensation.
While England and Wales, France and Spain each face unique challenges and have their own distinct approaches, new jurisprudence in each jurisdiction and the EU-wide implementation of the Damages Directive is contributing to the evolving landscape of private enforcement litigation. It will also be interesting to keep an eye on how each jurisdiction’s decision-making informs other courts’ decisions (if at all), particularly given the divergence of the UK from the EU as a result of Brexit.
By understanding the key themes and trends in these jurisdictions and the evolving procedural requirements, potential plaintiffs, defendants and their legal advisors can navigate the complexities of antitrust litigation procedure and explore existing and novel theories of harm to secure adequate compensation and redress for their clients.