Competition litigation is an area of robust and sustained development in Europe and the US, and it is incumbent on in-house and private practice lawyers, claimants and defendants, to be ready—armed both with understanding and with adequate resources.
Amid this year’s unsettling political developments and their potential disruption of legal environments, a variety of developments in litigation has empowered claimants to seek redress of infringements of competition law in Europe. This has also put defendants against these actions on notice to be more vigilant and to prepare for large-scale actions.
Notwithstanding turbulence across the EU this year, the long-term trend in competition litigation is clear: more competition actions, and more complex competition actions, are being brought and defended. Regulators, courts and lawyers engaged in competition litigation are becoming increasingly sophisticated. And litigation finance is a more important tool than ever—to empower the pursuit of redress where there is anticompetitive behavior as well as to enable the defense of weak claims.
Continuing pipeline of decisions and investigations
Regulators have set the pace for increased competition litigation: the Directorate-General (DG) for Competition of the European Commission (Commission) has been tenacious in pursuing companies engaging in anticompetitive behavior. In July 2016, for example, the Commission levied its largest-ever fine upon the so-called “trucks cartel” of DAF, Daimler, Iveco, MAN and Volvo/Renault. Settlements and decisions arising from its investigations into abuse of dominance by Gazprom and Google are imminent. Building on its cooperation with the US Department of Justice (DoJ) in successfully levying large fines against a range of banks for foreign exchange rigging, the Commission and the DoJ are collaborating to investigate anticompetitive behavior in pharmaceuticals, FinTech and other complex sectors, for example their pay-for-delay and platforms investigations.
Such investigations and their resulting decisions form the bedrock of private enforcement actions, and companies and individuals alike use them to bring follow-on damages actions. The ever-increasing focus of regulators on these large and growing sectors of the economy is contributing to an expansion of competition litigation—and will likely continue to do so for the foreseeable future.
Playing catch up with the long-established private enforcement tradition in the US, the Commission has spearheaded efforts to bring the EU’s various member states up to a minimum level of best practice in the field of competition damages actions. The Directive on Antitrust Damages Actions of 2014, indeed, aims to function as a template regarding matters like limitation periods and provides a rebuttable presumption that cartels cause harm; member states are to transpose this directive into their national legislation by 27 December 2016. Member states such as Finland and Spain are taking the opportunity to “race to the top” to ensure that their courts become a forum of choice for claimants seeking competition damages. In time, this will undoubtedly result in healthy competition for the longer-established forums of choice for such actions—namely England, Germany and the Netherlands—and will provide claimants with a range of viable alternatives.
Claimants choosing England as their forum will have greater flexibility as a result of legislative changes – in particular affecting the Competition Appeal Tribunal (CAT). The Consumer Rights Act 2015 (Act) and the accompanying CAT Rules 2015, for example, harmonized limitation periods for actions before the CAT with those of the more traditional forums within the High Court of the Chancery Division or Commercial Court. The Act also expanded the CAT’s jurisdiction to hear stand-alone and hybrid follow-on claims, rather than limiting its jurisdiction to “pure” follow-on actions sitting squarely within the four corners of the regulatory decision concerned.
Procedural and case law developments
In anticipation of the increased demand for competition forums, governments and courts have also sought to streamline procedures. In England, for example, the Act introduced to the CAT a mechanism for allowing opt-out class actions. Under this mechanism, a representative can be certified by the CAT to bring a claim on behalf of an entire class of UK-domiciled claimants (non-UK ones may opt-in); previously, collective actions could only be brought on an opt-in basis. This adds to other procedural improvements made to the CAT: a cost-capped fast-track procedure aimed at SMEs; a settlement procedure modelled on the Part 36 settlement procedure in the Civil Procedure Rules, which are applicable in cases brought before the High Court for example; and regarding the exchange of expertise between judges and economists, including the practice of “hot-tubbing”, or simultaneous cross-examination of experts. The High Court has also introduced a “financial list” that allows judges with specific expertise in complex banking sector disputes to be allocated to cases.
In light of the growth and harmonization of competition law across the EU, there is now a critical mass of new case law in the field, at both EU and member state level. At the EU level, an Advocate General of the General Court in Kone provided helpful guidance in January 2014 regarding the subject of “umbrella damages” arising from the Commission’s Elevators and Escalators Cartel decision. In England, both the High Court and the CAT have also yielded useful case law. Various judgments have clarified the scope of the jurisdictional arguments in competition law cases, and the territorial ambit for which such damages can be sought. These include the Court of Appeal judgment last October within the context of the Emerald case arising from the Commission’s Air Cargo Cartel decision, and the High Court judgments in May and July in the iiyama cases arising from the Commission’s CRT/CRT Glass and LCD Cartel decisions, respectively.
The CAT’s judgment in Sainsbury’s in July is historic, being the first stand-alone damages case in the UK that has resulted in a judgment. The case is one of several, which all arose from the Commission’s investigations into the multilateral interchange fees levied by the MasterCard and Visa payment systems. The CAT’s judgment is of particular help in clarifying the position regarding the defense of “pass-on”: it underscores the difficulty that cartelist defendants will have in establishing that large corporate claimants passed-on losses to their own customers and have thus not suffered losses themselves.
Litigation finance developments
The breadth, length and scale of anticompetitive behavior means that the value of the economic harm at stake can be enormous. One example of this is the aforementioned trucks cartel, which included cartelists covering almost the whole truck manufacturing output of Europe, and saw them overcharge their customers for 14 years across the entire European Economic Area. Given the sheer size of these and other damages claims being brought and defended across Europe, claimants are increasingly seeking options to move the costs of legal fees and expenses off balance sheets—particularly given the scale of the costs exposures involved.
Managing costs and expenses through a portfolio-based approach to financing litigation is increasingly appealing to law firms and clients, for both claims and defense matters. Burford crafted just such a solution for a FTSE 20 company seeking to manage a range of matters in a $45 million portfolio of funded matters.
Notwithstanding turbulence across the EU this year, the long-term trend in competition litigation is clear: the increasing sophistication of regulators, courts and lawyers is enabling robust and effective competition actions to be brought and defended. Litigation finance is a more important tool than ever to help empower the pursuit of redress where there is anticompetitive behavior.
 European Commission Press Release IP/16/2582, Antitrust: Commission Fines Truck Producers € 2.93 Billion for Participating in a Cartel, (19 July 2016), http://europa.eu/rapid/press-release_IP-16-2582_en.htm.
 Case C-557/12 Kone AG v. ÖBB-Infrastruktur AG, Opinion of Advocate General Kokott (30 January 2014).
 Bao Xiang International Garment Centre v. British Airways Plc  EWHC (Ch) 3071 (27 October 2015).
 iiyama Benelux BV v. Schott AG  EWHC (Ch) 1207 ; and iiyama (UK) Ltd v. Samsung Elecs. Co. Ltd & Ors  EWHC (Ch) 1980 .
 Sainsbury’s Supermarkets Ltd v. MasterCard Inc.  CAT 11.