We were delighted to host the annual GCR Live Competition Litigation Conference at our London office yesterday, which explored key current themes in competition litigation in an interactive discussion panel format.
Christopher Bellamy QC opened the conference with an insightful keynote address. This was followed by a series of discussions involving a distinguished line up of expert panellists, including Kim Dietzel, co-head of Herbert Smith Freehills’ competition litigation practice. These considered the continued growth of private enforcement across the EU, in particular in relation to collective actions, the impact of the Damages Directive and the key strategic considerations for both claimants and defendants facing the prospect of multiple claims in multiple jurisdictions.
We have summarised some of the key takeaways from the conference below.
Keynote address by Sir Christopher Bellamy QC
Following an overview of the historical background to class actions in the UK and a reminder of the serious consequences of infringing competition law, Sir Christopher highlighted the considerable cross-implications of increased private enforcement for the system of competition law enforcement as a whole:
- the potential negative impact on incentives to apply for leniency and/or agree a settlement with the competition authorities (in light of exposure to damages claims);
- the possibility of using the public enforcement settlement process as a means of ensuring that compensation is paid to the injured party (as illustrated by the recent acceptance by the CMA of commitments from Aspen involving the payment of £8m to the NHS following an investigation into anti-competitive arrangements relating to the supply of particular drugs); and
- the importance of ensuring an appropriate standard of review of competition infringement decisions in circumstances where the EU Damages Directive now requires that national courts accept national competition authority decisions as binding proof of liability.
He also emphasised the significant impact of the growth of third party litigation funding in this field, which has changed the landscape considerably, arguably moving increasingly towards privatisation of competition enforcement.
Against this background, Sir Christopher highlighted some key points coming out of three important recent cases:
Merricks v Mastercard (click here for our e-bulletin on the case)
- The Court of Appeal held that the CAT could always subsequently terminate a Collective Proceedings Order at a later date, for example if it subsequently transpired that the claim lacked sufficient data to calculate the rate of pass-on. Sir Christopher expressed concern with this approach given the extent of the investment required from the claimant at the certification stage. In his view, certification should be determined as early as possible in the proceedings.
- Merricks and a range of other cases involving the interchange fee overcharge have been proceeding separately and on the basis of diametrically opposed theories regarding the extent of passing-on (with direct purchasers arguing there was no pass-on, and indirect purchasers claiming that there was). This is clearly an unsatisfactory position, resulting in inconsistent decisions.
- In order to address this issue Sir Christopher suggested that the next stage of development of the competition litigation regime should include the introduction of an equivalent to the US judicial panel, to ensure that all cases involving common issues are brought together in the same court and are decided at the same time.
BritNed (click here for our e-bulletin on the case)
- The High Court judge did not consider himself constrained by the framework of the case set out before him by the parties, and ultimately found an overcharge on two specific heads not originally put before him (‘baked-in inefficiencies’ and ‘cartel savings’).
- On the use of economic evidence, the Court highlighted the importance of grounding the evidence in the factual reality and the need to explain difficult economic concepts in ordinary language.
Lloyd v Google
- The Court of Appeal overturned the High Court’s ruling which had refused Mr Lloyd permission to bring a representative action against Google under CPR 19.6. The Court of Appeal held that the representative procedure was permissible in this case. It was irrelevant that the claim was being brought on behalf of a large number of claimants (four million), which was defined in a fluid manner. The represented class were all victims of the same alleged wrong (illegal extraction of personal data), during the same period, and had all sustained the same loss.
- A key factor in the court’s decision appears to have been that failure to allow the representative action to proceed would result in a lack of redress for consumers affected.
- Although not a competition case, Sir Christopher suggested that this case may re-open the possibility of using the CPR 19.6 representative action procedure for damages claims (which had generally been thought to be impossible following the Emerald Supplies case).
Key takeaways from the panel discussions
Continued growth of private enforcement
- There is no doubt that the private enforcement landscape is rapidly evolving, and will continue to do so, against a backdrop of legislative reform and the growth of third party litigation funding.
- The EU Damages Directive should be seen as a real “game changer”, with new jurisdictions feeling encouraged and empowered to embrace private enforcement, and a sea-change in approach in at least some Member States to key issues such as disclosure and joint and several liability.
- That said, the traditionally popular jurisdictions of the UK, the Netherlands and Germany retain – at least for now – their status as well-established and highly regarded jurisdictions for claimants who have a choice of jurisdiction (which is increasingly common, given the permissive approach of the ECJ to the use of “anchor” defendants to assert jurisdiction in the context of competition claims).
- Whilst collective redress proposals at EU level have made relatively slow progress to date, there have been indications that these will be a priority for the new Commission. There have also been significant developments in respect of collective actions at national level in a number of EU Member States.
- For example, in the UK, the new opt-out collective actions regime introduced in 2015 is gaining momentum, with five applications for collective proceedings orders pending before the Competition Appeal Tribunal, awaiting the outcome of the appeal to the Supreme Court in Merricks v Mastercard regarding the correct test to be applied at the certification stage. Various reforms encouraging greater use of collective actions are also due to enter into force over the next year in other jurisdictions, notably in The Netherlands and Italy.
- However, despite the increasing number of formal collective redress mechanisms available to claimants seeking damages for infringements of competition law, more traditional routes of bringing damages claims (on both an individual and joint/group basis) remain popular in many jurisdictions. The choice of procedural route in any given case will depend on a number of different factors and can be an important tactical consideration.
Dealing with multiple claims in multiple jurisdictions
- The prospect of multiple claims in multiple jurisdictions is an increasingly common scenario which gives rise to opportunities and challenges for both claimants and defendants, both of whom have a “toolbox” of options available to them.
- Determining the best way to proceed will involve a detailed assessment of various complex and inter-related considerations, including jurisdiction, applicable law, speed of decision-making, expertise and breadth of experience of national judges, the relevance of any passing-on defence and the likely approach of the relevant courts to such issues.
- It is critical to pro-actively determine a clear claim or defence strategy from the outset, striking a careful balance between consistency of approach between jurisdictions and the need to take account of local specificity. It will also be important to maintain a degree of flexibility as the claims progress, adapting to changing circumstances as necessary; for example, so as to capitalise on successes in certain jurisdictions whilst minimising the impact of any negative decisions in others.
- Whilst co-defendants will usually have incentives to work together, the relationship between them is often delicate and complex, particularly in the competition law context, given their status as joint tortfeasors. Managing this relationship is now complicated further by the provisions of the EU Damages Directive which grant a limited exemption from joint and several liability to immunity recipients.