Antitrust Litigation 2019 Comparisons

Last Updated September 18, 2019

Contributed By Infralex

Law and Practice

Authors



Infralex is a full-service Russian firm established in 2014 by a group of partners with more than 20 years of legal advisory experience. Infralex's partners and attorneys combine outstanding legal expertise with in-depth industry knowledge and are highly regarded in the industry. The firm's clients include the Ministry of Transport of the Russian Federation, the Ministry of Education of the Russian Federation, Sberbank, MTS, Russian Railways, OAK, CNOOC Ltd, ANO Organizing Committee Rossiya-2018, Prosveshcheniye Publishing house, Avtodor and Mercury City Tower. The individual contribution of both partners and associates of the firm to the development of multiple areas of business law has gained high public recognition; a number of employees of the firm have been recognised with State and public awards. Infralex is a reliable ally in a constantly changing world, providing clients with the complex legal support and profound analysis necessary to realise the most daring ideas.

Antitrust litigation is a relatively new way to enforce business and consumer rights, its statutory basis appeared in Russian legislation only in 2012. Thus, judicial practice is still being established, nevertheless, more and more claims arising from breaches of antitrust legislation appear annually.

The following list of possible ways to protect commercial rights is not exhaustive, the most common methods are:

  • suppression of actions violating a right, or creating a threat of its violation, and re-establishing the situation that existed before the violation (including injunctions against the dominant party entering into a contract);
  • termination or alteration of the legal relationship (eg, amending contracts where one party has a dominant position);
  • invalidation of an act of the state or local authority;
  • recovery of damages;
  • declaration of transactions violating competition law to be invalid; and
  • reversal of the consequences of invalid transactions through the re-establishment of the parties’ initial state (restitution).

In January 2012 a new provision of the federal law on protection of competition, No 135-FZ, was introduced. According to this provision, entities whose rights and interests are violated as a result of a breach of competition law have the right to bring claims. These may include claims for restoration of the violated rights, compensation for damages (including loss of expected profit) and compensation for harm caused to property. Other regulatory acts in competition law, as well as the sections of the Russian civil code related to the recovery of damages and the declaration of transactions as being invalid, also apply.

Normally, the injured party first files an application with the Russian anti-monopoly authority, the Federal Antimonopoly Service (FAS), and on the basis of the FAS`s decision (as proof of a breach of antitrust legislation) applies to the court for damages recovery. Nevertheless, there is no statutory obligation to apply first to the FAS, thus the injured party may file the claim directly to the arbitration court. But in this case the party will have to prove not only the damages, but also the breach of anti-monopoly legislation.

There are no specialist courts for competition law cases in Russia. Competition law cases relate to business and other economic activity and, as a rule, involve commercial entities; thus such cases are considered in the state arbitration courts. Disputes regarding the legitimacy of administrative fines for competition law violations committed by executive officers (private individuals) are considered in general jurisdiction courts.

In 2014 a court system reform was carried out in Russia – the Supreme Court of the Russian Federation became the court of final instance. Before that, the Supreme State Arbitration Court of the Russian Federation was the court of final instance in relation to economic disputes involving commercial entities. It should be noted that, because of this reform, existing court practice regarding certain provisions of competition law is changing.

The decision of a national competition authority, unless challenged in the court, can be taken into account by that court as evidence of a breach of anti-monopoly legislation when considering a lawsuit on recovery of damages.

Russian federal law provides for the legal concept of prejudice, which means that the findings of an earlier court case shall not be proved again in another court case involving the same parties. If a decision of FAS is challenged in court, then the relevant court decision could be prejudicial in a subsequent dispute on recovery of damages.

The decisions of foreign courts, and the acts of foreign executive authorities, can be recognised in the Russian Federation only if this is stipulated by an international treaty. In the absence of such a treaty, plaintiffs applying to Russian courts with competition damages claims are obliged to present evidence for competition legislation violation, as well as presenting a cause-and-effect relationship between the breach of the anti-monopoly legislation and the occurrence of damages.

Article 23 of the competition law stipulates the participation of the anti-monopoly service authorities in cases related to antitrust law. This means that the anti-monopoly authority may be a third party to cases on recovery of damages in connection with violation of the competition law. In this case the law grants the anti-monopoly authority, as a participant in the process, the right to give explanations to the court, to produce its own arguments regarding any questions which may arise and to object to the arguments of other entities.

When considering cases, the court assesses the relevance, admissibility and credibility of each particular piece of evidence, as well as the adequacy and correlation of the evidence taken collectively. This assessment is based on full, objective and direct examination of everything presented.

According to the procedural legislation on evidential burden of proof, each party has to prove those circumstances, on which it relies, as grounds for its demands and counterarguments. In other words, the plaintiff bears the burden of proof regarding the existence of grounds for satisfying its claim, whereas the defendant bears the burden of proof regarding its objections to the claim. It should be noted that the anti-monopoly authority bears the burden of proof in cases which challenge its decisions.

There is no specific legislation governing the 'passing-on' defence and defendants are not prevented from attempting to prove the plaintiff's lack of grounds for recovery of damages. Standard practice would allow a defendant to claim that the plaintiff did not incur damages, as the plaintiff raised the price of their goods or services after the defendant increased theirs; the defendant would have to prove this. However, as far as we are aware, there is no practice of considering such arguments by the courts.

Any entity which considers that its rights have been violated has the right to bring a claim for the restoration of those rights. Consequently, in the event of a violation of competition law, indirect buyers can bring a claim for recovery of damages from the infringer. It should, however, be noted that in the case of recovery of damages it is necessary to identify a causal relationship between the offence and the damages. It is more difficult to prove existence of such causal relationship in relation to indirect buyers.

The length of the trial depends on its complexity and the number of entities participating in the case. On average, a case is considered by the court of first instance for between four and six months from the moment that the lawsuit is filed.

Court proceedings in Russia can include consideration of the case in several courts of appeal. The main appeal courts for reviewing a decision of a court of first instance are the appeal and cassation courts. The total case length, including appeals, averages from eight to twelve months.

Investigations by the anti-monopoly authority don't automatically suspend court proceedings, but the (FAS) may suspend its own investigation if it considers that the court decision will have a significant meaning for it.

Russian law provides for both the joinder of parties and class-action lawsuits. A claim may be brought jointly by several plaintiffs (joinder of parties) if:

  • the subject matter of the dispute is the common rights and obligations of several plaintiffs;
  • the rights and obligations of several plaintiffs have the same basis; and
  • the subject matter of the dispute is rights and obligations of the same kind.

At the same time, each of the plaintiffs acts in the legal process independently of the other party/parties. A lawsuit can be brought for the protection of the rights and legitimate interests of a group or class if:

  • the plaintiff, and all other entities on whose behalf the class action was filed, are participants in the same legal relationship; and
  • no fewer than five entities join the plaintiff.

Please note that this mechanism is not often used.

The Arbitration Procedure Code of the Russian Federation stipulates that any private or legal entity, appropriately affected by the claimed violation, may address the court of arbitration for the protection of the violated rights and legal interests of other entities similarly affected. Other authorities, organisations or entities may also address the court in certain stipulated cases, for example the public prosecution office, the Commissioner for the President of the Russian Federation for the protection of the rights of entrepreneurs and other public organisations.

Under Russian law if the parties conclude a settlement agreement it will have to be approved by the court, for this reason the parties file a motion for approval of the settlement agreement with the court.

After considering the matter the court may make an order. The court will not approve the settlement agreement if it contradicts the law or violates the rights and legitimate interests of other entities. If the settlement agreement is approved the case terminates.

Furthermore, the plaintiff can withdraw the claim in the court of first instance or court of appeal. If withdrawing the claim contradicts the law or violates the rights and legitimate interests of other entities, the court will not accept the withdrawal. These rules also apply to class actions

If the plaintiff withdraws a class action lawsuit, then all entities whose interests the lawsuit was supposed to protect have to be notified. The arbitration court will not accept such a withdrawal if the court does not have confirmation of this notification.

Summary judgment is allowed for claims which do not exceed RUB500,000 (USD7,700) for firms and RUB250,000 (USD3,800) for individuals.

When petitioned for by the plaintiff, and with the agreement of the defendant; or upon the initiative of the court, with the agreement of both parties, other cases may also be considered for summary judgment unless otherwise directly stipulated by law.

Summary judgment is directly prohibited for class actions.

If the case relates to business or other economic activity, and where the parties to the case are businesses or individual entrepreneurs, then the case is subject to consideration in the state arbitration court. As a rule, territorial jurisdiction depends on the defendant’s location. Normally Russian law is applicable.

The period in which claims, including those which relate to violations of competition law, can be brought is three years. This period starts from the date when the claimant learned, or should have learned, of the violation of its right by a specific entity.

If the period for bringing a claim is missed it can be restored by the court in exceptional cases, when the court recognises the reason for missing the established term as valid.

The limitation period ends when a claim is brought, in accordance with the established procedure throughout the period when the violated right is being protected.

Each party involved in the case must prove the circumstances to which they refer. Regarding this, all the evidence should be disclosed to the other parties involved in the case before the court session or within the term determined by the court. The parties are only entitled to refer to evidence which has been disclosed to the other parties in advance.

When filing the lawsuit; that is, before the judicial process has started, the plaintiff must enclose evidence confirming the circumstances to which they refer. This rule does not prevent the plaintiff from providing evidence during consideration of the case in the court of first instance.

When appealing the court decision the parties are limited in providing new documents. In particular, the appeal court accepts new evidence only if it considers that there were good reasons for the failure to provide the evidence earlier.

There is a general rule, according to which copies of the documents provided to a court by the party shall be forwarded to the other parties, if they do not have these documents. While the case is considered, the parties have the right to get acquainted with the materials provided to the court; that is, the parties can examine all evidence in the case.

On a motion of a party, the court can make an order demanding evidence from any third party, such an order is compulsory. The motion should contain the following:

  • the evidence;
  • those facts which are substantiated by the evidence; and
  • the reasons that prevent the party from obtaining the evidence by itself.

The court may request the necessary evidence at its own discretion. Failure to provide the court with the requested documents may result in the imposition of a fine, this fine does not relieve the entity from its obligation to provide the court with the requested evidence.

As mentioned in 5.1 Disclosure and Discovery Procedure all evidence should be disclosed to the other party. Even commercial secrecy is not a valid excuse for the withholding of evidence.

Usually leniency and/or settlement agreements with competition authorities are labelled as confidential and are not disclosed by the anti-monopoly authority to the parties of the anti-monopoly proceedings. Nevertheless, if the decision of the anti-monopoly authority is challenged in court, or leniency and/or settlement agreements are relevant to a case where damages are claimed, then as mentioned in 5.1 Disclosure and Discovery all evidence should be disclosed to all the parties to a case.

The following forms of evidence are accepted in court: written and material evidence, explanations of the parties, expert opinions, witness testimony, audio and video, and other documents and materials. In general, parties are not limited in providing any evidence which they believe confirms their opinion regarding the case. The court, however, cannot consider any fact as proven if it is confirmed only by a copy of a document whose original is not provided to the court and where copies of this document provided by the parties are not identical and there is no possibility of finding out the true content of the document using other evidence.

If the court considers it necessary witnesses may be obliged to appear in person, the breach of such a request is a finable offence.

Witnesses have to inform the court of the facts which are known to them personally and answer additional questions of the court and other persons participating in the case. Witnesses are not obliged to testify against themselves, their spouses or close relatives.

Conclusions based on the results of court-appointed expert examiners may be used as evidence in the case.

Parties to the case can commission their own expert opinions, but these are not considered as expert conclusions and belong to a different category of evidence known as other proofs.

If the expert examination was sanctioned by the court the expert should present their conclusions in the court session and answer appropriate questions.

In anti-monopoly cases, when calculation of damages is problematic, expert evidence may become an important basis for court decisions.

When considering a case on recovery of damages the court has to identify whether the following circumstances are proved: the fact of an offence, the existence of damages, the amount of damages, a causal relationship between the offence and the damages, and actions taken by the applicant for obtaining the expected profit if the lawsuit was filed for recovery of that profit.

To recover damages the plaintiff must provide the court with a calculation of the amount of damages, as well as substantiation of the calculation. Having determined that the above-mentioned circumstances have been proved and the reasonableness of the provided calculation of the amount of damages, and having also identified any other necessary circumstances, the court makes the decision on recovery of damages.

Existing Russian court practice regarding recovery of damages leads to a significant number of disputes ending in dismissal of the claim. One of the reasons for this is the difficulty of proving the amount of damages.

Unlike other jurisdictions, no special methods for the calculation of damages arising out of antitrust violations have been developed in Russia yet.

Russian courts, when hearing damages actions arising out of antitrust violations, use the common approach according to which the plaintiff must prove that the defendant is in breach of antitrust legislation, the fact of damages occurrence, the cause-and-effect relationship between the breach of antitrust legislation and the occurrence of damages and the volume of damages. 

In connection with the application of such a common approach, and considering the absence of special rules for calculation of damages arising from competition violations, in most cases the plaintiffs manage to recover only direct damages. For example:

  • as a result of additional expenses of the plaintiff on remedial measures (in case №А40-135137/12-131-526 the court satisfied the claim of the plaintiff on recovery of the cost of the boiler-house, which the plaintiff was forced to buy due to the avoidance of the defendant, a heating supplier, from entering into a heating supply contract);
  • to recover overpaid monetary funds as a result of monopolistically high prices, known as unjustifiable enrichment (in case №А74-1015/2012 the court, based on an anti-monopoly authority decision, where the defendant was found guilty of establishing monopolistically high prices for jet fuel, recovered damages in favour of the plaintiff that struck balance between the actually paid price and the price which was determined by the anti-monopoly authority as the market price); or
  • in separate cases the plaintiffs succeeded in recovering lost profits (in case №А40-14800/2014 the Supreme Court of the Russian Federation considered reasonable the claim of the plaintiff for the recovery of RUB408 million of lost profits, which arose from a breach of the anti-monopoly legislation. The damages recovered were calculated as a shortfall in the bonus which the plaintiff would have received if the defendant was not in breach of his supply obligations). 

In order to determine the amount of damages the court may commission an expert examination in accordance with the established procedure (in particular, please see the resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation of 6 September 2011, No. 2929/11).

Exemplary damages are not available in Russia.

Please see 2.5 Direct and Indirect Purchasers above.

In Russian civil legislation damages include actual damages and lost profits. Lost profits are calculated as the shortfall suffered by an entity because of the rights which have been breached.

When proving the amount of lost profits; for example, in a case where, due to monopolistically high prices the party overpaid, plaintiffs may refer to the average interest rate of bank deposits –ie, if the party had not overpaid the dominant entity it would have put the overpaid money in a bank account and would have gained profits according to the deposit interest rate.

Nevertheless, interest upon damages is not, itself, stipulated by legislation.

A claim may be filed in the arbitration court by several plaintiffs or against several defendants.

Joinder of parties is allowed if:

  • the subject matter of the dispute is the joint rights and obligations of several plaintiffs or several defendants;
  • the rights and obligations of several plaintiffs or several defendants have the same basis; and
  • the subject matter of the dispute is homogeneous rights and obligations.

Each of the joined plaintiffs or defendants acts unassisted in the proceedings, however, joined parties may commission solicitation to one or several of them.

If the court makes a decision against several defendants, it should either stipulate the share of each defendant in the decision or should state that the liability is shared.

In Russian law damages are awarded only if the plaintiff manages to prove that those damages appeared as a result of the actions of the defendant. A cause-and-effect relationship between those actions and the damages is a necessary element for success in court. Nevertheless, if the unsuccessful party in a case caused damages owing to the actions of a third party, it may claim for recovery from that third party by way of recourse.

There is no special injunctive relief available in competition law cases. Therefore, general interim remedies, under the rules of state arbitration courts or general jurisdiction courts, are available in competition law cases.

The list of interim remedies available under law is non-exhaustive. The court can grant an interim remedy if the lack of such a remedy could complicate, or make impossible, the enforcement of the court decision or for the prevention of significant damage to the applicant.

Examples of interim remedies include prohibiting the defendant and other entities from taking certain actions or the seizure of property (Russian legislation considers property rights as property).

One of the requirements for interim remedies is that they must be commensurate with the stated claim.

Applications for remedies should be considered during the next working day after the day of filing. The party is not obliged to send the copy of an application to the other parties and the judge resolves the application without inviting the parties to the session.

The court cannot refuse to grant injunctive relief if the other party provides cross-undertaking as to damages.

Cross-undertaking as to damages may be provided at the initiative of the party or the request of the court. Cross-undertaking as to damages is provided in the form of a deposit into the account of the court of a sum stipulated by the court or by providing a bank guarantee, warranty or any other financial security for the same sum. The sum will be determined with regard to the size of the damages claim. The sum of cross-undertaking as to damages may not be less than half of the damages claim.

The defendant, and other entities whose rights are considered to have been breached by injunctive relief, after a decision of the court in which the damages claim was waived are entitled to claim damages from the party who requested the injunctive relief.

No alternative dispute resolution methods are available.

Such funding is not prohibited by law but it is not wide spread in Russian legal practice.

Courts fees are comprise of public dues and courts costs connected with the case.

Court costs may include the fees due to experts, representatives' fees and other expenses incurred by the parties in connection with the case.

Court costs incurred by the party in whose favour the court finds should be reimbursed by the unsuccessful party. Nevertheless, the parties may make an agreement on court fees distribution which will be applied by the court.

In cases of abuse of procedural rights, or failure to perform procedural obligations that delay or frustrate court sessions or impede case consideration, the court may impose court fees upon the guilty party.

Court-fees distribution matters are resolved in the final court decision.

It should be noted that there are special rules for representatives' fees. According to the law, representatives' fees should be awarded by the court within reasonable limits. When determining the reasonableness of such fees, the court considers a number of factors: the amount of work done, attorneys' fees in similar cases, and the duration and complexity of the case. Thus, the court may reduce the fee incurred by a party and award only a part of it.

Contingency fees, which are an ordinary practice in Western countries are not encouraged by Russian courts. The practice of the Supreme Court of the Russian Federation shows that contingency fees, which are paid only if there is a favourable result in the case, cannot be recovered as a legal cost.

The contingency fee is meant to be a separate compensation and depends on whether the case is considered in favour of the client, it cannot be for providing new services in addition to the services already provided and paid for.

There have been disputes related to the recovery of such additional compensation for a favourable outcome (contingency fee) from the anti-monopoly authority. The Supreme Court of the Russian Federation refused to award such a fee (please see Ruling № 302-KG15-2312 of 25 May 2015).

Decisions of the court can be appealed in the appeal and cassation courts, in addition, there could be a supervisory appeal filed with respect to the court decision. 

The appellation court modifies or cancels a decision of the first instance court in the following cases:

  • incomplete examination of circumstances that have a significant bearing on the case;
  • absence of proof of circumstances considered by the court to have a significant meaning for the case;
  • inconsistency of conclusions stipulated in the decision as being relevant to the circumstances of the case; or
  • breach, or wrong application of material or procedural rules, when this has resulted in a wrong decision.

Unconditional bases for cancellation of the first instance court decision are:

  • consideration of a case by the court in improper composition;
  • consideration of a case by the court in the absence of any party, if that party was not informed about the time and place of the hearing;
  • breach of language rules during case consideration;
  • a decision by the court about the rights and obligations of entities that were not involved in the case;
  • non-signing of the decision by the judge or one of the judges or signing by an improper judge or judges;
  • absence, in the materials of the case, of the protocol of the session or its signing by improper individuals; or
  • breach of the rules of secrecy of judge's conference.

The cassation court may modifies or cancels a decision of the first instance court or appellation court in the following cases:

  • inconsistency of conclusions stipulated in the decision as being relevant to the circumstances of the case; or
  • breach, or wrong application of material or procedural rules, when this has resulted in a wrong decision.

Unconditional bases for cancellation of the first instance court and appellation court decisions are the following:

  • consideration of a case by the court in improper composition;
  • consideration of a case by the court in the absence of any party, if that party was not informed about the time and place of the hearing;
  • breach of language rules during case consideration;
  • a decision by the court about the rights and obligations of entities that were not involved in the case;
  • non-signing of the decision by the judge or one of the judges or signing by an improper judge or judges;
  • absence, in the materials of the case, of the protocol of the session or its signing by improper individuals; or
  • breach of the rules of secrecy of judge's conference.

The Supervisory Instance Court reviews cases in exceptional cases only, such as: violation of rights guaranteed by the Russian Constitution or international law, violation of the interests of an indefinite number of persons and violation of the uniformity of enforcement of the law by the courts.

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Law and Practice

Authors



Infralex is a full-service Russian firm established in 2014 by a group of partners with more than 20 years of legal advisory experience. Infralex's partners and attorneys combine outstanding legal expertise with in-depth industry knowledge and are highly regarded in the industry. The firm's clients include the Ministry of Transport of the Russian Federation, the Ministry of Education of the Russian Federation, Sberbank, MTS, Russian Railways, OAK, CNOOC Ltd, ANO Organizing Committee Rossiya-2018, Prosveshcheniye Publishing house, Avtodor and Mercury City Tower. The individual contribution of both partners and associates of the firm to the development of multiple areas of business law has gained high public recognition; a number of employees of the firm have been recognised with State and public awards. Infralex is a reliable ally in a constantly changing world, providing clients with the complex legal support and profound analysis necessary to realise the most daring ideas.

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