Antitrust Litigation 2020 features 18 jurisdictions. The guide provides expert legal commentary on the basis for a claim, class actions, challenging claims, disclosure and discovery, witness and expert evidence, damages, liability and contribution, ADR, funding and costs, and appeals.
Last Updated: September 18, 2020
Antitrust litigation in the form of follow-on damages claims against cartels is now the norm in most European countries. The volume of claims has increased significantly in recent years since the implementation of the EC Damages Directive. France, Germany, the Netherlands and Spain in particular have seen a sharp increase in the volume (and value) of antitrust litigation, partly fuelled by a huge volume of individual claims against the trucks cartel. Litigation has been a standard part of the antitrust enforcement process for even longer in the United States, Australia, Canada and New Zealand. While antitrust litigation continues to grow and embrace new procedures and approaches in those jurisdictions (not least, class actions), the focus in terms of developing jurisdictions is now moving to Asia. As China, Japan and Korea are seeing a growth in cartel investigations, so antitrust damages claims in those jurisdictions will start to become more common.
To date, England and Wales has been the leading jurisdiction within Europe for EU-wide damages claims, in light of its highly respected commercial courts, specialist competition judges and a litigation procedure most like the US, including extensive disclosure requirements on both claimants and defendants.
The Brexit Effect
In preparation for Brexit, the UK government has passed statutory changes effective on the day following the end of the UK's exit transition period. These will bring the direct jurisdiction of EU institutions and treaties to an end in the UK and enable the UK courts to diverge from EU competition law. European Commission decisions issued after the UK's Brexit transition period will no longer be binding on the UK courts. However, there are a number of grandfathering provisions which will preserve elements of the pre-Brexit framework. Most importantly, decisions of the EC issued prior to the end of the Brexit transition will still be binding in the UK courts. In addition, if alleged breaches of EU competition law took place before the end of the transition period, the UK courts will be required to apply EU law as at the end of transition.
Article 102 TFEU
In Europe, as the competition regulators switch their focus to the big technology companies and increase the number of Article 102 TFEU abuse of dominance investigations, so the number of antitrust claims based on Article 102 has increased. Such claims are not limited to follow-on damages claims, but encompass standalone damages claims based on Article 102 and/or injunction applications to prevent an alleged abuse of a dominant position, often as a matter of urgency. Such injunction applications are often settled privately, without a court hearing, and never see the light of day. However, most of these claims are unsuccessful and the cost consequences in those jurisdictions which order costs to be paid by the losing party (including the UK) can be significant, so such claims – particularly on a standalone basis – should be considered very carefully.
The majority of cartel damages claims are settled prior to the trial hearing. In the more significant claims in terms of value of sales and quantum claimed, it may take many years to arrive at the point where a principled settlement can be achieved, which is a genuine estimate of the claimant's loss, including an assessment of the extent to which such loss has been passed on to third parties. Such a principled assessment will require the parties to go through the steps of disclosure of documents, factual witness statements and expert economic reports to quantify the loss suffered (potentially, in addition to interlocutory applications on issues such as jurisdiction and/or limitation). In lower-value claims, parties may consider it worth trying to achieve a settlement in advance of doing the bulk of such work, particularly where the legal costs of years of trial preparation might exceed the value of the claim itself.
Class actions are increasing in popularity in a variety of jurisdictions in Europe, particularly in England and Wales, and most recently with the introduction of collective action legislation, the Netherlands. The significance of antitrust litigation, both as a type of general commercial litigation and as one of the pillars of competition enforcement, is demonstrated by the fact that procedures are being introduced in some jurisdictions exclusively for antitrust litigation, whether it is the introduction of disclosure of documents across Europe for antitrust damages claims or the introduction of opt-out class actions for antitrust damages claims in England and Wales. There will be numerous examples of, as yet, unidentified procedural issues which will work their way through the courts for some years to come on issues relating to identifying the relevant class or disclosure of documents, particularly in those jurisdictions in which wide-ranging disclosure is an entirely new approach in any form of litigation.
The presence of specialist (often US) claimant firms in an increasing number of European jurisdictions and the growth in litigation funding generally, but specifically in the context of antitrust damages claims, are having a significant impact on the strategy for managing such claims. US claimant firms have pursued the introduction of class actions with evangelical zeal, positioning themselves as being on the side of the angels standing alongside the competition authorities and against the combined forces of the cartelists.
Opt-Out Class Actions
The English courts are struggling with the practical impact of opt-out class actions. In the most prominent collective proceedings in England and Wales, Walter Merricks CBE v MasterCard, in which loss is claimed on behalf of an estimated 47 million people, the CAT ruled that the claim was not appropriate as a collective proceeding. This judgment was overturned by the Court of Appeal, and MasterCard's appeal was heard by the UK Supreme Court this year. The Supreme Court judgment will determine:
Other collective actions in the UK, including the trucks litigation, are currently stayed, pending the outcome of this appeal.
Antitrust Litigation in Other Jurisdictions
Other jurisdictions which are seeing an increasing volume of antitrust litigation include Israel and some jurisdictions in Latin America which have active national competition authorities, including Argentina, Brazil and Mexico. Israel also has a class action regime and the claimant lawyers are beginning to focus on antitrust claims.
COVID-19 has not yet had a visible impact on antitrust litigation in most jurisdictions. Many of the legal issues arising from the pandemic to date concern consumer law issues (rather than competition law issues), such as price gouging. However, the last financial crisis resulted in the then-biggest global cartels in terms of volume and value to date – the numerous Libor cartel investigations worldwide and the foreign exchange cartel. We are yet to see whether the next financial crisis results in an increase in cartels and cartel damages litigation. However, the usual motivation for cartels in a financial crisis of falling profit margins combined with working from home and the risk of lighter-touch compliance in these unique circumstances is a potentially toxic combination which may well lead to an increase in cartel damages claims in years to come.
Big pharma was under attack by competition authorities pre-pandemic for excessive pricing across a variety of well-known pharmaceuticals. These investigations are continuing across Europe and are also likely to lead to follow-on damages litigation.