Antitrust damages proceedings

Injured parties have a number of options to recover their loss. They can initiate stand-alone proceedings, follow-on proceedings through ‘claim vehicle proceedings’ or otherwise. The difference between the stand-alone and the follow-on proceedings is that the stand-alone proceedings are initiated with a claim even before a competition authority has established an infringement, whereas follow-on proceedings are only initiated after a competition authority has established an infringement.

Stand-alone proceedings

In stand-alone proceedings, a competition authority has not yet established infringement. Because the injured party still has to prove the infringement of competition law in claims in these proceedings, stand-alone proceedings are less appealing. After all, it would be preferable for the work to have already been done by a competition authority.

Follow-on proceedings

This is different in the follow-on proceedings. In these proceedings, injured parties claim compensation for their (antitrust) damage – the clue is in the name – following a decision by a competition authority that competition law has been infringed. A court is then bound by that decision. Contrary to stand-aloneproceedings, there can therefore no longer be any debate as to whether competition law has been infringed.

‘Claim vehicle’ proceedings

In the Netherlands, ‘claim vehicles’ can act as claimant in the antitrust damages proceedings on behalf of injured parties. Dutch law offers claim vehicles two different types of proceedings.

• A. The injured parties may assign their claim to the claim vehicle or grant the claim vehicle a power of attorney. The claim vehicle then combines these claims to litigate against one or more cartelists. The claim vehicle may act in its own name or in the name of the injured parties. This method of litigation is usually opted for in what are known as financed proceedings. As the financier provides (usually a great deal of) capital to fund the proceedings, the financier wants to be able to generate a return on its invested capital.
• B. The claim vehicle can initiate a ‘class action’ based on Article 3:305a DCC. This allows the claim vehicle to obtain a declaratory judgment stating that the cartelists acted unlawfully. Until recently, the claim vehicle could only seek a declaratory judgement regarding liability but it could not claim damages on behalf of the injured parties. Each injured party had to bring its own claim for compensation in follow on litigation, or settle on a collective or individual basis. Since January 1, 2020, it is allowed to also claim damages in class actions on behalf of the injured parties ^[1]The new legislative proposal for the Act on the Resolution of Mass Claims in Collective Action (Wet Collectieve Afwikkeling Massaschade, WCAM) was adopted by the House of Representatives on 29 … Continue reading. The new regime applies to collective actions for damages initiated on or after the date of its entry into force for actions that relate to events that took place on or after 15 November 2016. The injured parties also have the option not to be bound by the declaratory judgment (they can use an opt-out scheme). Under the new regime however, foreign injured parties can only be represented in the proceedings when they opt-in, which is a major change compared to the old regime under which this is also on an opt-out basis ^[2]See for more information on the revision of the class actions regime in the Netherlands our blog by Michelle Krekels & Daniëlle Brouwer, ‘Major revision of the regime for collective actions in … Continue reading.

Contrary to option A, the claim vehicle must be a foundation or association with full legal capacity in these proceedings. A claim vehicle does not require the cooperation of the injured parties (except opt-in if required), but is subject to other restrictions.

Options A and B can also be combined. The class action (B) can only be initiated by a Dutch foundation or association. The foundation or association may not make a profit, which explains the complexity of a financed procedure ^[3]Articles 2:26(3), 2:285(3) and 3:305a(1) DCC.. The claim of the foundation/association is only admissible if that foundation/association can sufficiently safeguard the interests of the injured parties ^[4] Article 3:305a(2) DCC. . This condition was later added to prevent the class action from being used by companies that put their own (commercial) interests above the interests of the injured parties they represent.

In order to safeguard the interests of the injured parties, the Claim Code was created as part of self-regulation ^[5]The Claim Code was announced by the Claim Code Committee 2011 and is available at: https://www.consumentenbond.nl/binaries/content/assets/cbhippowebsite/nieuws/compljuniclaimcodecomm2011.pdf.. The Claim Code includes the rule that the board of the foundation or association must be independent of the assisting law firm. While professional players of good repute already adhered to these rules on a (semi) voluntary basis, the new class actions regime adds stricter requirements regarding the standing of a claim vehicle. It is now mandatory for a claim vehicle to have (i) a non-commercial objective, (ii) a supervisory board, (iii) a mechanism for decision-making by the persons whose interests are represented, (iv) sufficient economic means for the costs of the class action and (v) sufficient experience and expertise for running a class action ^[6]Article 3:305a(2) DCC..

The Claim Code and the requirements set forth in Article 3:305a DCC do not apply to a claim vehicle described under option A. The claim vehicle may also assume legal personality here other than a Dutch foundation or association. The claim can therefore also be lodged by a foreign company, provided that this company is authorised to lodge such a claim ^[7]Article 10:119(a) DCC.

Litigating in the Netherlands

General

Within the European Union, there are three preferred jurisdictions in which to conduct such proceedings: the United Kingdom, Germany and the Netherlands. The UK has recently become less appealing due to the great uncertainty associated with Brexit. This leaves the Netherlands and Germany to battle for the number 1 position. The Netherlands is attractive for settling international class action suits, regardless of whether these are antitrust damages claims or other damage claims and regardless of whether a lawsuit has actually taken place in the Netherlands.  The Netherlands is not only attractive because of the possibility of setting up claim vehicles, but also because of the broad jurisdiction and the possibility of litigating before the Netherlands Commercial Court in English.

See also the page ‘Reasons for Litigating in the Netherlands’ [hyperlink]

Jurisdiction

The Antitrust Damages Directive does not contain any special provisions with regard to jurisdiction in antitrust damages cases. Therefore, when the defendant is domiciled in an EU Member State, the jurisdiction is determined on the basis of the Brussels Convention, officially termed the Brussels I Regulation Recast ^[8]Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters … Continue reading. The main rule is that the court of the Member State where the defendant is domiciled or where the harmful event occurred has jurisdiction.

Simply on the basis that one of the defendants (also referred to as the ‘anchor defendant’) is domiciled in the Netherlands, the claimant may bring an action before the Dutch courts against all defendants, provided that there is a close connection between the claims ^[9]Article 8 Brussels I Regulation Recast.. According to the Dutch courts, a close connection exists where the same legal or factual situation applies ^[10]Amsterdam District Court 7 January 2015, ECLI:NL:RBAMS:2015:94 (Equilib/KLM); District Court 4 June 2014, ECLI:NL:RBAMS:2014:3190 (CDC/Akzo et al.), para. 2.12. See also District Court of The Hague 1 … Continue reading. The Dutch courts accept jurisdiction quite readily as regards defendants who are not domiciled in the Netherlands ^[11]District Court 4 June 2014, ECLI:NL:RBAMS:2014:3190 (CDC/Akzo etal.), paras. 2.12-2.13.. Not doing so would create the risk of fragmentation, which is not in line with the Brussels I Regulation Recast ^[12]See e.g. District Court of The Hague 17 December 2014, ECLI:NL:RBDHA:2014:15722; District Court of Amsterdam 7 January 2015, ECLI:NL:RBAMS:2015:94 (Equilib/KLM); District Court of Limburg 25 February … Continue reading. The Dutch courts have jurisdiction with regard to the non-Dutch defendants if:

• a) the cartel infringement fully or partly occurred in the Netherlands or the cartel was concluded in the Netherlands;
• b) the implementation of this cartel took place fully or partly in the Netherlands or the damage caused by the cartel infringement was fully or partly suffered in the Netherlands;
• c) at least one of the (alleged) infringers was domiciled in the Netherlands ^[13]CJEU 21 May 2015, C-352/13 (CDC/Peroxide). .

The circumstance that the cartel also has connections with other jurisdictions does not diminish the jurisdiction of the Dutch court ^[14]District Court of Limburg 25 February 2015, ECLI:NL:RBLIM:2015:1791 (Deutsche Bahn/Nedri Spanstaal et al.), para. 3.5; District Court 4 June 2014, ECLI:NL:RBAMS:2014:3190 (CDC/Akzo et al.), para. … Continue reading. Furthermore, the court is not readily of the opinion that involving a new party in ongoing proceedings constitutes an abuse of procedural law, as the court generally gives precedence to the principle of effectiveness ^[15]District Court of Amsterdam 7 January 2015, ECLI:NL:RBAMS:2015:94 (Equilib/KLM), paras. 3.6-3.8; District Court of Limburg 25 February 2015, ECLI:NL:RBLIM:2015:1791 (Deutsche Bahn/Nedri Spanstaal et … Continue reading. If the proceedings against the anchor defendant are ultimately withdrawn because the injured party reaches a settlement with that defendant, the Dutch court remains competent to rule with regard to the other defendants ^[16]CJEU 21 May 2015, C-352/13 (CDC/Peroxide)..

In principle, choice of forum clauses only apply to claims of a contractual nature. Disputes about infringements of competition rules are considered non-contractual claims within the Netherlands. For that reason, the Dutch court ruled that a choice of forum clause did not affect the court’s jurisdiction ^[17]See also District Court of The Hague 1 May 2013, ECLI:NL:RBDHA:2013:CA1870 (CDC/Shell et al.).. The only exception is the rare case in which the agreement containing the choice of forum clause is relevant for the ruling in the cartel case ^[18]Amsterdam District Court 4 June 2014, ECLI:NL:RBAMS:2014:3190 (CDC/Akzo et al.), para. 2.23..

Governing Law

In the context of antitrust damages cases, private international law matters often play a key role. After all, modern cartels are often cross-border affairs, involving various different international parties. As the Antitrust Damages Directive does not contain any specific rules on the law governing an antitrust damages claim, the customary conflicts of law rules must be applied to determine which law governs the claim in question.

The Rome II Regulation has applied to claims relating to antitrust damages since 11 January 2009. The basic premise for claims with effect from this date is that the governing law is the law of the country where the market is, or is likely to be, affected ^[19]Article 6(3)(a) Rome II Directive.. These will often be markets in more than one country, in which case the applicant(s) may, under certain circumstances, opt to apply the law of the forum country on the basis of the Rome II Regulation, provided that the market in the chosen Member State is one of the markets that is ‘directly and substantially’ affected by the infringement of competition ^[20]Article 6(3)(b) Rome II Directive.. In this way, the Regulation aims to prevent fragmentation of the governing law.

Obligations that arose before 11 January 2009 are subject to the Unlawful Act (Conflict of Laws) Act (Wet conflictenrecht Onrechtmatige Daad, ‘WCOD’). This Act has a ‘market rule’ ^[21]Article 4 WCOD. comparable to that of the Rome II Regulation, but does not offer the option of choosing the law of the forum country if this would to lead to fragmentation of the governing law. However, the Dutch court has demonstrated that it will take a flexible approach in this regard under certain circumstances. In a case involving a global cartel, the Dutch court ruled that, based on the principle of effectiveness, on the injured parties’ explicit choice of Dutch law, and on due process, a practical approach was necessary, which in this case justified Dutch law being declared applicable to all claims ^[22]District Court of Amsterdam 1 May 2019, ECLI:NL:RBAMS:2019:3392 (SCC/KLM).. In this case, litigation vehicles conducted legal proceedings in their own name on the basis of bundled claims obtained by assignment.

Submission of evidence

It is presumed at law that a cartel causes damage ^[23]Article 6:193l DCC.. However, this favourable evidentiary presumption does not mean that injured parties have nothing to prove. What they still have to demonstrate is the extent of the damage and the causal link between the cartel and the damage. The court does not generally set a particularly high bar for proving the extent of the damage. In a case involving a global cartel, the court held that the injured parties could not have known what a reasonable price for the products in question should have been, and that this therefore could not be reasonably have been expected of them ^[24]District Court of Gelderland 24 September 2014, ECLI:NL:RBGEL:2014:6118.. The principle of effectiveness entails that cartelists can be required to allow inspection of their price calculations. If they fail to do so, the court can estimate the damage.

Pursuant to Article 843a DCCP, a claim can be lodged to obtain information from the other party. The party lodging the claim must have a legitimate interest in inspecting certain documents related to the legal relationship to which it is a party. In order to prevent relevant evidence from ‘disappearing’, evidentiary seizure can also be levied. The other party can only refuse to provide information if there are serious reasons for doing so.

Damage/loss calculation

The basic principle of Dutch compensation law is that, to the extent possible, injured parties are put in the situation in which they would have been without the damaging event. The cartelist will generally argue that the injured parties did not suffer any damage in so far as they passed on their damage to their direct or indirect customers (the ‘passing-on defence’). Since the implementation of the Antitrust Damages Directive, this defence, which places the burden of proof on the cartelist, has been incorporated into the DCC at Article 6:193p. The defence can be helpful in a situation where a cartelist is sued by both its direct and indirect customers. After all, without the passing-on defence, the cartelist can in theory be ordered to pay for the same damage twice, while overcompensation is expressly excluded by the Directive.

Compared to some other jurisdictions, Dutch courts have proven to be rather claimant-friendly when it comes to passing on, refusing to accept the passing-on defence as ‘an opportunity for defendants to evade liability’ ^[25]District Court of Gelderland 29 March 2017, ECLI:NL:RBGEL:2017:1724 (TenneT/ABB), para. 4.18.. With reference to the principle of effectiveness and the scope of the Damages Directive, Dutch courts have ruled that, even when the amount of damage (passed on) cannot be determined precisely, the Dutch court may estimate the damage ^[26]Supreme Court 8 July 2016, ECLI:NL:HR:2016:1483 (TenneT/ABB), paras. 4.3.1 and 4.3.4.. Dutch courts also ruled that the possibility of overcompensation should not stand in the way of awarding damages when it was unlikely that consumers would collect the scattered damages further down the line ^[27]District Court of Gelderland 29 March 2017, ECLI:NL:RBGEL:2017:1724 (TenneT/ABB), paras. 4.17 and 4.18..

Limitation

The limitation period of a claim for compensation of antitrust damages involves a relative and an absolute component. The relative period ends five years after the infringement of the cartel prohibition has ceased and the injured party is aware or could have been aware of the cartel, the damage the injured party is suffering as a result, and the entity liable for it, the cartelist(s) ^[28]Article 6:193s DCC.. All these conditions must therefore be met if the limitation period is to commence. The absolute limitation period ends twenty years after the infringement of the cartel prohibition has ceased. If one of the two periods has expired, the claim is definitively time-barred.

Costs

Upon the commencement of the proceedings, both the claimant and the defendant owe a modest amount in court registry fees. There is no rule to the effect that the ‘loser pays’. The unsuccessful party can only be required to pay the successful party the costs of the proceedings and a portion of the attorney’s fees. The exact amount that the unsuccessful party has to pay is decided on a case-by-case basis. 

Read more: Chapter 1: Cartel Damages – General