Key themes across the EU and the UK in 2023-24
The UK has also continued to see growth in both standalone and follow-on antitrust damages claims in 2023. In particular, the number of collective actions has increased, with the Competition Appeal Tribunal (CAT) (the arbiter of those claims at first instance) and appeal courts applying a low threshold test for certification. Claims are being pursued across a range of sectors (including technology, financial services, telecommunications, transport, and utilities) and increasingly rely on allegations of abuse of dominance.
Increasing scope for forum shopping
Despite the aim of the PDD to discourage forum shopping, claimants still enjoy ample latitude to choose their preferred courts for antitrust damages claims in the EU.
The European Court of Justice (ECJ) has taken a rather claimant-friendly approach to establishing jurisdiction in recent years. Interpreting the Brussels I bis Regulation on jurisdiction broadly, the Tibor Trans ruling opens the door to suing in any EU Member State where the infringement had effects.
In another recent ruling (Volvo and Others), the ECJ went beyond Shevill, which applies to general tort claims, in allowing for the bringing of one claim at the registered office of the claimant in respect of harm suffered in several EU Member States.
Judgments in other areas of law have further broadened the opportunities for forum shopping. In Sumal, the ECJ allowed claimants to sue local subsidiaries that were not directly involved in the conduct for which their parent company was held liable. This means claimants are given the option to sue the local subsidiary for damages in their home jurisdiction, avoiding service out of jurisdiction.
In two pending cases, the ECJ has been asked by national courts to provide guidance on how the Sumal criteria apply when assessing jurisdiction in different scenarios: claims brought against a local subsidiary of a cartel participant serving as the anchor defendant (Power cable and Cardboard) and claims brought at the domicile of the parent company of the entities that suffered harm (MOL). In the latter, Advocate General Emiliou recently suggested interpreting the rules on jurisdiction narrowly; if the ECJ follows this opinion, it would be the first instance in which the ECJ has averted a further broadening of the scope for forum shopping in the EU.
While the PDD contributed to harmonizing national rules on private enforcement, significant differences persist between national laws and practices, making some EU Member States more attractive than others for private enforcement. Factors such as court expertise, procedural efficiency, collective actions and litigation costs continue to influence claimants’ decisions and to lead to claimants favoring Germany and the Netherlands over other EU Member States. The PDD may not have levelled the playing field, but it has boosted antitrust actions across the EU. Spain is one of the EU Member States that has seen a surge in cases.
In the UK, the undertaking liability principles in Sumal have been applied recently, for example, by the High Court in JJH Enterprises v Microsoft. However, post-Brexit, the ability of claimants to sue in the UK is constrained by the need to also satisfy the forum non conveniens (or appropriate forum) test. In JJH Enterprises v Microsoft, that test was met since ties to the UK were clear (for example, it was the key market allegedly affected). However, in other recent cases, such as Mercedes v Continental, relevant ties (for example, the location of the infringing conduct and where the majority of damage was suffered) pointed outside the UK, leading the High Court to stay the UK proceedings.
Rules on evidence and disclosure: opportunities and challenges for parties and courts
The UK has always required extensive disclosure of evidence in competition cases, but historically most EU Member States did not. This made it hard for claimants to prove and recover the harm caused by antitrust breaches. Against this background, the PDD introduced new rules on disclosure, intended to remedy the information asymmetry between claimants and defendants. In several cases (RegioJet, PACCAR and Others), the ECJ was asked to clarify the scope of these disclosure obligations and notably ruled that a party is required to disclose not only “relevant evidence” that it already possesses, but also documents that it has to create ex novo by compiling information or data that it holds.
With the broader scope for disclosure, it remains to be seen whether the ability of claimants to access easily relevant documents and data will translate into a more robust burden of proof on claimants than we have seen being applied in some jurisdictions.
However, disclosure also raises confidentiality concerns for business secrets and other sensitive information. To balance these interests, the European Commission issued a communication in July 2020 suggesting various measures, such as confidentiality rings and in camera hearings, to limit the access and use of confidential information. These rules have facilitated private enforcement, but also increased the workload and responsibility of national courts, which have to oversee the disclosure process and protect the confidentiality of information.
In the UK, confidentiality rings are widespread in competition litigation. However, recently they have started to face increasing scrutiny, with concerns raised about their impact on open justice and the disruption they can cause in public hearings. The CAT adopted a new practice direction which imposes safeguards against unwarranted confidentiality claims, including potential cost consequences for non-compliance. In Aurora Cavallari, the High Court rejected a party’s wide claims for confidentiality, de-designating as confidential over 1,000 documents.
Quantification of damages: a (broad) axe to grind
In the EU, courts have adopted diverging approaches to assessing expert evidence and quantum. For example, in Germany and Italy, courts often rely on experts appointed by the court to help them quantify the harm caused, while in Spain, courts cannot appoint experts and often resort to a judicial estimation of harm, taking into account the approach of courts in other countries, including the UK.
In the UK in the last year, the CAT and High Court, respectively, were required to quantify the impact of cartel conduct in circumstances where, the courts found, the parties’ experts’ economic modelling failed to sufficiently and reliably measure the claimants’ loss. Rather than allowing these difficulties to defeat the claim, the courts used the expert evidence to narrow as far as possible the range of possible outcomes and then adopted the so-called “broad axe” approach to arrive at a judicial best estimate of the likely loss. In Royal Mail v DAF (now under appeal), the CAT rejected the econometric models proposed by both sides’ experts but found an overcharge of 5%, which was the mid-point between the competing models. In Granville v Chunghwa & LG, the High Court broadly accepted the defendant’s expert’s model, but increased the overcharge finding by almost 50% to account for a risk that the model underestimated the cartel’s effects. Both cases also raised difficult issues concerning the requirements for proving pass-on, an issue that the Court of Appeal is now expected to provide guidance on.
The evolving landscape of collective proceedings
The Representative Actions Directive (RAD) will change the dynamics of antitrust damages litigation in the EU, with several EU Member States now introducing a collective redress mechanism for the first time. This will be a major shift in practice for EU Member States, like Spain, that currently do not allow claims with similar features to be bundled or mass proceedings to be initiated. However, to succeed, collective redress actions need suitable funding regimes. These regimes would allow qualified entities to deal with the costs and risks of litigation. They would also ensure adequate incentives and access to justice for consumers. The RAD, however, gives Member States considerable leeway to design and implement their funding mechanisms, which could lead to divergent and ineffective approaches across the EU.
The UK has a collective proceedings regime which was stimulated by a claimant-friendly decision of the UK Supreme Court in late 2020 (Mastercard v Merricks) and has since produced large numbers of high-value claims (albeit none of these have yet reached a final judgment or settlement). Eight distinct sets of collective proceedings were issued in 2023, together claiming aggregate damages in excess of GBP14 billion, with abuse of dominance cases making up the bulk of claims by value. Several points of principle have been established or affirmed in 2023:
- Several applications for certification were heard (including in some cases on appeal) and none were refused permission, with the CAT and Court of Appeal confirming the low threshold test for certification (established in Mastercard v Merricks).
- In FX, the Court of Appeal found that the CAT was wrong to refuse to certify on an opt-out (rather than an opt-in) basis. In so doing, it held that the strength of a claim will generally be a neutral factor when choosing between opt-out and opt-in, meaning that a test of practicability is likely to be decisive.
- Unsuccessful appeals in the Trucks and FX litigation relating to “carriage” (ie which of two competing class representatives should have conduct of the claim) indicate that the Court of Appeal will generally treat carriage as a matter for the CAT, exercising its broad case management discretion.
- Litigation funding was shaken by the Supreme Court’s decision in R (PACCAR) v CAT, which rendered a common type of litigation funding agreement, whereby the funder’s return is calculated by reference to the amount of damages awarded, unenforceable in many instances (and in all opt-out collective proceedings). However, funders have put in place commercially acceptable alternatives which have so far withstood legal challenge. In addition, the UK government has also committed to introducing legislation to address PACCAR.
- In McLaren v MOL, the CAT considered (and approved) the first settlement in collective proceedings (albeit in relation to the claims against just one of several defendants). In so doing, the CAT recognized that a rough-and-ready assessment of the proposed settlement might be necessary, since a detailed and precise review of the merits would discourage settlement.
