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Trends in legal finance: Competition & antitrust

October 11, 2019
Aviva Will

Economic borders continue to blur as companies vie for ever-shrinking global market shares—paving the way for anticompetitive behavior on a global scale and resulting in potentially billions of dollars’ worth of economic harm. Unsurprisingly, in the past year we saw continued expansion in competition collective actions and follow-on activities in Europe and the UK.

Expanded group action opportunities in 2017

In Europe, recent high-profile, high-value decisions and investigations indicate a trend of regulators aggressively pursuing companies engaged in anticompetitive behavior. In 2016, for example, the European Commission levied its largest-ever fine—an astounding €2.93 billion—against a group of truck makers engaged in price-fixing and other anticompetitive behaviors. More recently, the Commission opened an investigation into Volkswagen, Daimler and Audi following allegations that the German car makers had been colluding on the price of components and their use of suppliers for decades.

Heightened regulator activity sets the pace for potential follow-on competition claims, with claimants further benefiting from the EU Antitrust Damages Directive, which has been implemented across the UK and Europe in 2017. The directives impose a more claimant-friendly regime across the EU by shifting the burden of proof to establish that a cartel has not caused loss and damage shifts onto the defendant. Because the rules apply Europe wide as well as in the UK post-Brexit, the position for claimants has dramatically improved.

Europe is poised to see a flurry of increased competition follow-on claims, but even as the new directives come into full force, the established competition forums remain the most attractive and hospitable to would-be claimants:

  • Germany: In 2017 Germany passed a measure putting the EU directive into effect, with other key changes to the country’s antitrust laws. The most notable change seeks to rebalance the costs claimants may have to pay if their claim is unsuccessful—the amendments limit the fees parties can seek to the total fees that one defendant could ask for.
  • Netherlands: The Dutch judicial system features a unique legal procedure in which a representative entity called a Vereniging or Stichting can act on behalf of a group to submit a claim to establish liability of the defendants, which can serve as a stepping stone to claimants individually or collectively seeking damages. Claimants in the Netherlands also benefit from no adverse costs.
  • UK: In addition to implementing a damages directive that complies with EU requirements, the UK also has the only specialist competition court in Europe, the Competition Appeal Tribunal (Craig Arnott addresses the UK competition landscape in detail elsewhere in this issue of the Quarterly).

What law firms can do in 2018

One of the key provisions of the EU Damages Directive is that actions can be brought in the jurisdiction in which the defendant is domiciled or in the jurisdiction where the harmful event occurred. As a result, law firms have a new opportunity to implement a global strategy to bring actions in multiple jurisdictions on behalf of their clients, as opposed to being limited to the one the firm has expertise in.

Working with the right financing partner can help firms implement an ambitious global competition strategy. In addition to providing capital that can be used across jurisdictions to support claims that are almost always expert-intensive and extraordinarily expensive, the right finance provider can offer even more value to law firms. A strategic partner like Burford has an experienced team that can offer deep insights into legal matters and has the capacity to commit for the long-term—ensuring law firms and their clients have the resources they need to see a matter through to its conclusion.

There is no question that competition remains a growing area of need and opportunity that is still largely underserved by the funding industry. As law firms embrace the new tools available to them, they will help ensure more clients can be made whole, regardless of jurisdiction.