Competition Damages Cases
Sweden's Competition Damages Act (2016:964) (CDA) implementing the Antitrust Damages Directive (2014/104) has only been in place since 27 December 2016, so case law on damages claims is scarce. In addition to the follow-on claims after the Telia Broadband case, there have only been a few more anti-trust cases.
The Telia case (case No MD 2013:5) was ended in May 2018, when the Supreme Court decided to not grant Tele2 and Yarps leave to appeal regarding their damages claims (Cases No T 5365-16 and T2673-16) against Telia, which in 2013 was found to have abused its dominant position through a margin squeeze. The judgment from the Svea Court of Appeal, which found that there had been no abuse of dominance and dismissed the damages claims, thereby became final.
The two other cases concern Net at Once and Visita against Booking.com. In the Net at Once case, Net at Once (a telecommunications operator) submitted a claim for damages against GothNet (a data communications service provider) for the latter's abuse of a dominant position through price discrimination and/or margin squeezing. In November 2019, the Patent and Market Court of Appeal confirmed the Patent and Market Court's ruling to dismiss the case, as it had not been proven that GothNet had a dominant position on the market (Case No PMT 2216-18).
In July 2018, the Patent and Market Court delivered a judgment regarding vertical price parity clauses. Visita, the organisation for the Swedish hospitality sector, had filed an action asking the court to impose an injunction against Booking.com requiring it to remove its vertical price parity clauses (parity clauses for prices the hotels offer on its own websites) from their agreements with hotels. Booking's horizontal price parity clauses had been found to be anti-competitive by the Swedish Competition Authority (SCA) in 2015 and Booking committed to removing them. The Patent and Market Court found that the vertical price parity clauses had an anti-competitive effect and ordered Booking to cease applying these clauses, subject to a fine in case of non-compliance. However, the judgment was overturned by the Patent and Market Court of Appeal in May 2019 who said that Visita had failed to prove that the terms had a restrictive effect on the market (Case No PMT 7779-18).
During the first half of 2020, four cases were lodged with the Patent and Market Court requesting a declaratory judgment that (i) Wallenius Wilhelmsen ASA, (ii) NYK Group Europe Ltd and Nippon Yusen Kabushiki Kaisha, (iii) MOL (Europe Africa) Ltd and Mitsui O.S.K Lines Ltd, as well as (iv) Compañía Sud Americana de Vapores are not liable for damages, before different points in time, in relation to Volvo, based on the EU Commission's decision in the Maritime Car Carriers case (AT.40009). NYK and Nippon retracted their summons application in May 2020. The cases stem from Volvo's claim for a declaratory judgment before the High Court of Justice in London lodged on 17 January 2020 against all the companies in the EU Commission's decision.
As follows from the above, private antitrust litigation has yet to be successful in the Patent and Market Court of Appeal. It can also be noted that the SCA has also had no success, but rather several defeats in the recent past. The recent trend of the Patent and Market Court's findings of competition law infringements being annulled in the Patent and Market Court of Appeal will, we believe, lead to defendants being increasingly inclined to go through an appeal process, which in turn will increase the likely costs and time for antitrust cases.
It would be an important step forward if a first, broadly recognised, damages case would be successful. This would probably require a change of attitude in the Swedish business community to the effect that seeking damages becomes seen as a viable option that would not damage important commercial relations going forward. Moreover, a first successful class action for antitrust damages could open the way for more such cases, which are currently not generally perceived as an attractive option for Swedish companies or consumers suffering direct or indirect damages from undertakings' breaches of the competition rules.
Currently, most infringements that have been established by the courts fall under the old (much shorter) rules on limitation, which has meant that most damages claims have been statutorily barred once the infringement has been established by the courts. However, competition infringements after 27 December 2016 fall under the new limitation rules, which allow for an interruption of the limitation period while a matter is being investigated by a competition authority. In theory, more damage cases should therefore materialise during the coming years.
While the CDA governs actions for damages for infringements of competition law provisions, the Competition Act (2008:579) (CA) sets out which violations provide a right to damages (the definition of violation is set out in Chapter 1, Section 2 of the CDA). Chapter 3, Section 25 of the CA provides a right to damages for parties injured because of infringements of Chapter 2, Sections 1 or 7 of the CA or Articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU). The basic antitrust prohibitions in Swedish competition law mirror the prohibitions in Articles 101 and 102 of the TFEU and include prohibitions against agreements between undertakings that restrict competition (Chapter 2, Section 1 of the CA) and abuse of a dominant position (Chapter 2, Section 7 of the CA).
It is not necessary for a competition authority to have issued a finding of an infringement for a private antitrust action to be initiated. Consequently, both follow-on and standalone claims are available.
Since September 2016, the Patent and Market Court has had jurisdiction over competition damages actions as well as competition cases brought by the SCA. The Patent and Market Court is the only competent court with regard to competition cases and if such a claim is sent to another court, that court should transfer the case to the Patent and Market Court (Chapter 10, Section 20a of the Code of Judicial Procedure). Competition law cases before the Patent and Market Court are handled by two legally trained judges and two economists. If there is no need for economic expertise the court may instead be constituted of three legally trained judges, although this is rare.
The SCA does not make final decisions establishing competition law infringements but sues before the Patent and Market Court in first instance. The CDA stipulates that a finding of a breach of the provisions in the CA in a final ruling may not be re-examined in a subsequent action for damages. This is a change from the earlier Swedish legal tradition, which considered judgments as only binding between the parties and as an evidentiary fact (which could be rebutted) in all other cases. Final decisions by foreign competition authorities or review courts are regarded as prima facie evidence of the fact that an infringement of competition law has occurred in subsequent damages proceedings.
The SCA has no legal right or obligation to intervene in damages cases. However, as is noted in 6.2 Expert Evidence, the courts may, at the request of a party, request the SCA to calculate the damage. The SCA has the right to refuse to provide such assistance.
Typically, it is the claimant that has the burden of proof. However, Swedish case law has adopted principles which significantly ease the burden of proof borne by injured parties in situations where proffering precisely specified items of supporting evidence is particularly difficult or can unduly impede the effective exercise of the right to compensation guaranteed by the TFEU. To further remedy the information asymmetry, the CDA also includes a presumption that cartel infringements have caused damage. The presumption stands unless it is rebutted. It should be noted that the presumption only applies to the existence, and not the extent, of the damage.
The formal burden of proof is that claims have to be proven, which is a relatively low standard of proof, only slightly above 50%. However, in practice, Swedish courts tend to require more certainty in order to award damages.
Claims can be brought both by direct and indirect purchasers.
As noted in 2.4 Burden and Standard of Proof, in relation to cartel infringements the CDA provides for a rule of presumption that an overcharge (or surcharge) will, unless otherwise proven, be considered to have been passed on to an indirect buyer (or supplier) if the infringement caused an overcharge (or surcharge) for the direct buyer (or supplier).
There is no statutory deadline set for how long it takes for an oral hearing to take place after a summons application is delivered to the Patent and Market Court. Generally, it takes about one to three years before a final judgment is delivered at first instance.
It is likely that the number of cases regarding competition damages will increase in the future, especially appeals (because of the likelihood of the Patent and Market Court of Appeal annulling the Patent and Market Court's judgment).
A private damages action can proceed while a related public enforcement action is pending. The claimant cannot, however, rely on the evidence that a public enforcement decision entails, and instead has to prove the infringement itself. It is also possible for the court to stay proceedings in a private enforcement case in order to await a judgment in another case (eg, public enforcement) if the subject matter of that case is of exceptional importance in the private enforcement case.
According to the CDA, a private damages action may be suspended by the court if two or more parties have started settlement discussions that relate to claims that are relevant to the case at hand. The case should be resumed before the court within two years of the date of the court's decision to stay proceedings.
Chapter 5, Section 2 of the CDA mandates class actions. These actions are brought in accordance with the Class Action Act (2002:599), which already mandated class actions for competition damages. A class action can be brought on behalf of indirect purchasers as well as direct purchasers. No antitrust class action proceedings have thus far been brought in Sweden.
There are three forms of class action:
Class actions are only available on an opt-in basis. Thus, a member of the class who has not notified the court in writing, within the time set out by the court, that he or she wishes to be covered by the class action, shall be deemed to be excluded from the class.
The main benefits of class actions are the cost-sharing aspect and that, in some cases, the preparatory acts necessary to gather members for a class action have proved to have a strong effect on the defendant's willingness to enter into settlement negotiations.
Bringing a class action requires that the relevant questions of fact must be common or similar to the entire class. Moreover, the group of claimants must be "suitable" with regard to size and character and be well-defined to enable individuals to establish whether they are eligible to partake in the class action.
Claimants in private class actions and organisation class actions must, in general terms, be represented by a member of the Swedish Bar Association. Only an organisation authorised by the government (myndighet) may initiate an organisation class action.
In practice, the procedural questions regarding whether the class action will be approved take considerable time to decide, and one case had to be settled by the Supreme Court several years after the start of the action. These practical obstacles have meant that there have been only a few class actions and none for antitrust damages in Sweden. In the ten years since the Class Action Act was enacted we are aware of only about ten cases.
Note that collective settlements require judicial authorisation (ie, the court must approve any settlement entered into by the plaintiff on behalf of the group members). This approval will be given unless the terms of the settlement are unreasonable or discriminatory.
There is no concept in Swedish law that corresponds to strike-out judgment. However, under Section 10 of the Class Action Act, a court may dismiss a claim if it is unfounded. As noted in 2.2 Specialist Courts, the Patent and Market Court is the only competent court with regard to competition cases. If a claim is submitted to another court, that court should transfer the case to the Patent and Market Court. However, if the case is evidently (uppenbart) unfounded the first court may, according to the same paragraph in the Class Action Act, dismiss the case instead of transferring the case to the Patent and Market Court.
A court may also dismiss a case if the general requirements for an admissible claim in Chapter 13, Sections 1 or 2, of the Swedish Procedural Code are not met, or if the court has no jurisdiction to hear the case (in cases where the respondent has denied jurisdiction in its first response to the court).
Summary judgments are available for default judgments (ie, when the respondent has not submitted its response to the statement of claim within the stipulated time) or when the claim has been admitted by the respondent.
The Brussels I Regulation and the 2007 Lugano Convention regulate whether a Swedish court has jurisdiction in a private competition case involving persons domiciled in the EEA. In cases involving persons not domiciled in the EEA, there is no general rule determining whether Swedish courts have jurisdiction or not, so cases are evaluated on a case-by-case basis. The general principle followed is that actions should be brought in the state where the defendant resides or has its seat.
Alternatively, Swedish courts also have jurisdiction if the infringement took place, or if the damage occurred, in Sweden. The Court of Justice of the European Union (CJEU) has recently confirmed that, in an action for damages arising from an infringement of Article 101 of the TFEU in the context of cartel-affected pricing and gross price increases for trucks across the EEA, "the place where the harmful event occurred" covers the place where the market affected by that infringement is located (that is, the place where the market prices were distorted and in which the alleged victim claims to have suffered damage). This is the case even if the alleged victim brings an action against a participant in the cartel from which it did not purchase products (Case C-451/18 Tibor-Trans Fuvarozó és Kereskedelmi Kft. v DAF Trucks N.V. ECLI:EU:C:2019:635).
Swedish courts also recognise agreements of jurisdiction/forum (prorogationsavtal), where the parties – if at least one of them is domiciled in an EEA member state – have agreed that Swedish courts should have jurisdiction to try a claim for antitrust damages.
As long as Swedish courts have jurisdiction, private actions may also be brought against foreign corporations or individuals and by foreign corporations or individuals. However, it should be noted that foreign claimants (not domiciled in the EEA) may, if the defendant requests it, be required to provide security, usually in the form of a bank guarantee, covering all legal costs that may be awarded to the defendants.
As regards the choice of law, in cases involving companies from within the EU, Swedish courts will apply the Rome I Regulation (Articles 4–8) to cases where the parties have a contractual relationship and the Rome II Regulation where the claim regards indirect damages, specifically Article 4.1 (the law of the country where the damages arose) and Article 6.3 (where markets have been affected or are likely to be affected). Where competition in several countries has been, or is likely to have been, affected the courts will apply Swedish law if a market in Sweden has been directly and substantially affected.
The CDA stipulates a limitation period of five years from the moment the infringement ceased and the claimant became aware of, or should reasonably have been aware of, the anticompetitive behaviour.
Previously, there were no rules on a standstill or interruption of the limitation period while a competition authority investigated the issue or while legal proceedings were conducted. Such rules are now included in the CDA, which stipulates that the limitation period is suspended while a competition authority takes action in the case of the infringement to which the claim relates. A new limitation period of five years commences from the day that there is a legally binding decision on the infringement or if the authority concludes its investigation in another manner.
The Swedish legal system does not provide for discovery in the true sense of the term. Under the Swedish system, exchanges of documents pre-trial are, generally, only made on a voluntary basis. However, within the framework of a court proceeding (ie, shortly before or during the proceeding), there is a general obligation on a person (natural or legal) in possession of a document that may have evidentiary value to disclose that document ("procedural duty of disclosure"). The rules on disclosure of evidence are found in Chapter 38 of the Code of Judicial Procedure and require that a party seeking an order to produce evidence should identify the document and explain what information is included in the document.
As a general principle, documents received or prepared by a public authority are public. This principle is, however, subject to a number of exceptions in the Public Access to Information and Secrecy Act (SFS 2009:400): the SCA's file, and information about an undertaking’s business operations, inventions and research results, are treated as confidential if the undertaking may be expected to suffer injury if that information is disclosed.
Furthermore, documents that the SCA holds and that contain declarations within a leniency programme, settlement briefs, written responses and other information that have been submitted to the SCA, information provided by the SCA to the parties (such as a draft statement of objection, or draft settlement decision) and settlement briefs that have been recalled, may not be the subject of a production order as long as the SCA is still handling the case. The three latter categories may be subject to a document production order once the SCA has closed its proceeding.
The CDA also stipulates that declarations made within a leniency programme and settlement briefs are not to be produced as evidence. Certain other categories of document may also only be produced by the party who has obtained them from the SCA, or a person who has acquired their rights. This is a limitation of the fundamental procedural rules in Sweden on free trial of evidence and free provision of evidence.
Typically, confidentiality is only maintained as regards third parties, and not as regards a party to the proceedings. However, courts have the authority, under criminal responsibility, to prohibit counsel, management or parties from providing certain documents received during the court proceedings relating to competition damages to third parties in order to prevent a "trade with documents".
To ensure the secrecy of documents that a court has received through access to evidence from leniency statements and any settlement submissions, new legislation entered into force in April 2018. A party would only be allowed to access these documents to the extent the court finds it appropriate.
Written correspondence to and from external lawyers (an external lawyer being, for this purpose, a lawyer admitted to the bar in an EEA member state or Switzerland), documents held by or entrusted to the external lawyer or documents which have been compiled by the client with the purpose of seeking legal advice from an external lawyer and internal company documents only reflecting and/or containing legal advice given by an external lawyer are protected by legal privilege and may not be subject to a court order to produce them. External lawyers are also prevented from giving evidence on matters confided to them in their practice. Advice from in-house lawyers is not legally privileged in Sweden (essentially due to the fact that an in-house lawyer cannot be a member of the Swedish Bar Association).
Documents submitted to a public authority are, as a general rule, public and only information on an undertaking’s business operations, inventions and research results (ie, trade secrets) is treated as confidential.
As mentioned above, documents that the SCA holds and that contain declarations within a leniency programme, settlement briefs, written responses and other information that has been submitted to the SCA are protected from disclosure. The same applies to information provided by the SCA to the parties (such as a draft statement of objection, or draft settlement decision) and settlement briefs that have been recalled. However, the three latter categories may be subject to a document production order once the SCA has closed its proceeding. The CDA stipulates that only declarations made within a leniency programme and settlement briefs may not be produced as evidence.
Presentation of evidence is the responsibility of the parties and it is up to each party to decide whether to rely on witnesses of fact, or if it is sufficient to present other evidence.
Everyone who is not a party in the case may be heard as a witness and, as a general rule, everyone also has a duty to testify. However, there are some exceptions to this, which are set out in Chapter 36 of the Code of Judicial Procedure. A person who is not covered by any of the exceptions has a duty to testify and can be compelled by the court to give evidence. Witnesses are summoned under penalty of fine to appear at the hearing before the court, if they fail to appear at the hearing the court may decide that they must be brought to court. If a witness (without a valid excuse) refuses to take an oath, to testify or to answer a question, the court shall order the witness to perform his or her duty under penalty of fine, and, if the witness persists in his or her refusal, under penalty of detention.
The party who has called the witness, unless the court directs otherwise, will open a witness examination. Subsequently, the opposing party will be afforded an opportunity to hear the witness. Afterwards the court and the parties may put additional questions to the witness. The party who invoked the examination ought to get the first opportunity to do so.
Witnesses generally give testimony orally, but a written witness statement may be accepted in certain situations. A statement made in writing for a pending or contemplated proceeding may be admitted as proof only if what can be assumed to be attainable by an examination in person, the importance of the statement and other circumstances warrant it; and if:
Swedish courts may, at the request of one of the parties, appoint experts (eg, economists) to establish violations and prove damage. The courts are typically reluctant to appoint experts themselves as the general rule is that the parties direct the procedure and control which evidence they wish to invoke.
A court-appointed expert must not have any conflict of interest with any of the parties. If a person has agreed to be appointed by the court, he or she may not subsequently withdraw from the assignment without valid cause. A court-appointed expert has the same duty to testify as a witness but it not required to divulge any trade secrets, they submit a written statement prior to the hearing.
The courts may also, at the request of a party, request that the SCA calculates the damages, but the SCA has a right to refuse to provide this assistance.
The most common alternative, however, is that the parties appoint their own economic experts. The parties do not need any permission from the court to adduce expert evidence. If more than one party introduces expert witnesses they are either heard on their own or jointly, the latter being a process known as "hot tubbing".
A party-appointed expert is only required to testify if the other party requests so. Furthermore, whereas a court-appointed expert is first questioned by the court, and then by the parties, with party-appointed experts, the party invoking the expert starts the examination. Subsequently, the opposing party shall be afforded an opportunity to hear the expert.
A prerequisite for receiving compensation is that the competition infringements were conducted wilfully or through neglect. Compensation for damage caused by an infringement includes compensation for actual loss (financial loss or loss of, or damage to, property (damnum emergens)) and loss of income (including loss of interest (lucrum cessans)). The objective of damages awards for infringement of competition law is to restore the claimant’s financial situation to what it would have been had the infringement never occurred. Therefore, when setting damages, the courts will compare the claimant’s actual financial situation with the hypothetical financial situation in the absence of the infringement. Compensation will also reflect other detrimental effects on the plaintiff’s business, even those of a more long-term or difficult-to-quantify nature (such as loss of goodwill or detrimental impact on an intellectual property right).
The amount of the damages can be reduced if the plaintiff has contributed, by fault or negligence, to the injury sustained. If the plaintiff has benefited from the infringement, this too would have an impact on the amount of damages awarded. Compensation will also be adjusted for any settlement or agreement between the parties. Fines imposed by competition authorities, however, are not taken into account when determining damages.
Sweden does not recognise punitive damages.
The passing-on defence is available in principle, when one is quantifying damages. As mentioned in 7.1 Assessment of Damages, Swedish law only recognises a right to compensation for actual damage. Thus, the compensation should be reduced by an amount equivalent to any overcharge the injured party has passed on to its buyers or any undercharge the injured party has passed on to its suppliers.
The CDA stipulates that interest will accrue on the compensation amount, due from the time the damage occurred. The interest rate is 2% above the reference rate of the Sveriges Riksbank (the central bank of Sweden) from the time the damage was caused until legal proceedings to claim compensation were initiated. Thereafter, the interest rate is 8% above the reference rate.
As a general rule, if there is more than one infringer, the infringers are jointly and severally liable for damages caused by their infringement. Under Swedish law, "joint and several liability" means that if several parties are liable for damage caused by them, then a claim can be brought against any of them for the same amount as if that party had been liable for all the damage. However, the CDA includes certain limitations on joint and several liability, such as when the infringer’s market share, at any point in time during the infringement, has been below 5% or where the infringer has been part of a leniency process. It is also not possible to be jointly liable for damage if one party enters into a settlement with the party seeking damages.
The infringers' part of the damage shall be calculated considering the respective infringers comparative responsibility for the damage that was caused by the infringement according to Chapter 4, Section 1 of the CDA.
A leniency applicant is only jointly and severally liable for damages that have occurred for direct or indirect buyers or suppliers, and other damaged parties, if the damage cannot be covered by any of the other infringers.
If a company has paid more than its share of the damages, that company has the right to be compensated by one or several of the other infringers up to the amount representing that infringer's part of the damage but they would have to initiate a separate proceeding for compensation against the other infringers.
There is no right for a claimant to receive an interim award of damages in competition damages cases.
General measures (seizure of property as security for a future award or prohibition against respondents taking any actions which could diminish the value of a future award, for example) are, however, available to a claimant under Chapter 15 of the Swedish Procedural Code, and can be ordered without notice to the other party if urgently required or where there is a risk of sabotage. An applicant for interim measures is also required to provide security for any damage that the request for those measures may cause the respondent. This security is typically provided in the form of a bank guarantee. The typical handling time by the courts for a security measure is between one to ten working days.
As noted in 5 Disclosure/Discovery Procedure, a claimant can also request an order from the court that obliges the respondent to disclose certain documents or other material. These requests may not be granted without notice to the other party.
Under Section 1 of the Arbitration Act, the civil law consequences of competition law may be the subject of arbitration; this requires an agreement between the parties to settle an issue by arbitration. A party must also invoke an arbitration agreement on the first occasion that it pleads its case on the merits in court. The invocation of an arbitration agreement, raised on a later occasion, will have no effect unless the party had a legal excuse for not doing so sooner and invoked the agreement as soon as the excuse ceased to apply. A party will forfeit its right to invoke the arbitration agreement as a bar to court proceedings where the party has opposed a request for arbitration, has failed to appoint an arbitrator in due time or fails, within due time, to provide its share of the requested security for compensation to the arbitrators.
While a dispute before arbitrators is pending, or before, a court may, irrespective of the arbitration agreement, issue decisions in respect of security measures where it has jurisdiction to do so.
Litigation may be funded by third parties. There is nothing hindering claimants or defendants from deciding to share the costs between themselves and they are, as a rule, held jointly and severally liable for the legal costs of the opposing party.
The Swedish Bar Association does not accept contingency fees, with one exception. Within a class action framework, a claimant may agree with his or her counsel (who must be a member of the Swedish Bar Association) that a fee should depend on the outcome of the case. This type of agreement will, however, require the approval of the court.
Note that in the case of class actions, where the defendant is liable for the claimant’s litigation costs but is unable to pay, group members have a duty to use the received compensation to pay for the claimant’s litigation costs.
In general, the losing party bears the legal costs. The winning party can thus recover all reasonable litigation costs from the losing party; this includes costs for legal, expert and court fees. The costs may also be apportioned between the parties depending on the degree of success of each party.
In the case of class actions, where the defendant is liable for the claimant’s litigation costs but is unable to pay, group members have a duty to use the received compensation to pay for the litigation costs.
Under Swedish law, a non-EEA resident bringing an action before a Swedish court against a Swedish national or legal person must, at the defendant’s request, furnish security to guarantee payment of the costs for the judicial proceedings, in the event that the person or company bringing the action is ordered to reimburse costs. This guarantee, in order to be accepted by the court, is best provided in the form of a bank guarantee.
A judgment from the Patent and Market Court can be appealed to the Patent and Market Court of Appeal, subject to the granting of a leave to appeal. In addition, the Patent and Market Court of Appeal can give consent to its judgments being appealed to the Supreme Court. If this consent is not provided the judgment of the Patent and Market Court of Appeal is final. Due to this specific structure, if the Patent and Market Court of Appeal provides for the possibility of an appeal of its judgment to the Supreme Court, that judgment may be appealed.