Netherlands: Class actions – litigation, policy and latest developments

Introduction

The Dutch legal system for collective actions is known to be an effective way of seeking redress for collective damages, including cartel damages. This overview provides information on the private enforcement of competition law infringements in the Netherlands, the background of the collective redress mechanisms that are available and their relevance from a competition law perspective.

The Dutch legal system allows for the bundling of claims through the power of attorney and the ‘assignment model’. In cartel damages cases, often following on from a fining decision, the assignment model is used and accepted by the Dutch courts. Additionally, the Dutch legal system has the following two collective redress mechanisms: (i) a collective settlement under the Class Actions Settlement Act (WCAM); and (ii) a representative collective action under the Settlement of Large-scale Losses or Damage Act (WAMCA). The WAMCA, which entered into force on 1 January 2020, allows claims for monetary damages that relate to events that took place on or after 15 November 2016.^[1] since 1 January 2020, the Dutch legal system facilitates the private enforcement of competition law through four collective redress mechanisms.

The following provides an overview of the current status of private enforcement of competition infringements in the Netherlands. We then elaborate on the four collective redress mechanisms available under Dutch law and their relevance from a competition law perspective, concluding with a number of general observations.

Private enforcement in the Netherlands

Article 101(1) of the Treaty on the Functioning of the European Union prohibits cartels and restrictive agreements. This is mirrored in article 6 of the Dutch Competition Act. The victim of a competition infringement established by the European Commission (EC) or the Netherlands Authority for Consumers and Markets (ACM) will not be directly compensated by the administrative decision for any harm they have suffered. The EC and the ACM are empowered to impose fines for breaches of competition rules. These fines, however, are not intended as a form of compensation and any party that has suffered damage due to an infringement of competition rules can seek redress in the civil courts.

Almost all recent Dutch civil proceedings involve claims brought by parties after the EC or a national competition authority has established a competition law infringement (follow-on proceedings). An infringement of (European or national) competition law provisions in principle constitutes a wrongful act under article 162, Book 6 of the Dutch Civil Code (DCC). If the EC or the ACM has taken an infringement decision that is no longer subject to appeal, the unlawfulness of the behaviour in question has been established.^[2] Claimants will still have to provide evidence on proof of damage that has arisen and the causality between the unlawful behaviour of the infringer and the damage suffered by the parties. It is also possible to bring a claim without a decision of a competition authority (stand-alone proceedings). In that case, the claimant must prove a wrongful act.

Competition law related damages claims in the Netherlands have to date mostly been brought by claims vehicles to which victims of an infringement assign their claims. Examples of such claims relate to the cartels for Sodium Chloride,^[3]Asphalt,^[4]Paraffin Wax,^[5]Air Cargo,^[6]Elevators^[7] and Trucks.^[8] A few claims have been initiated by individual parties including TenneT v Alstom,^[9]TenneT v ABB^[10] and Van Gelder v Shell.^[11]

Concerning representative collective actions, these are mostly instigated by entities representing consumers. One such example is the collective action by the Dutch Consumers Association against Philips (and others) further to the decision of the EC^[12] (as confirmed by the European Court of Justice) on the Television Monitor Tube cartel.^[13] A second such claim is that of the Dutch App Stores Claim Foundation instigated in October 2022 against Google (Alphabet) alleging abuse of a dominant position regarding its operating systems.^[14] The Dutch foundation also announced that it will pursue a similar claim against Apple, alleging that both Apple and Google have acquired a very dominant position with their operating systems and associated app stores.^[15] The proceedings against Google, and in the future against Apple, are the first representative collective actions under the WAMCA that involve alleged infringements of competition law and monetary claims.

The four collective action mechanisms

The Netherlands is already one of the main jurisdictions for follow-on damages claims. In the previous section, we mentioned two representative actions on behalf of a large group of consumers. In particular, the proceedings instigated by the Dutch App Stores Claim Foundation will be interesting to follow. Our expectation is that these kinds of proceedings will allow for the approach by Dutch courts as described below.

Dutch civil proceedings are efficient and allow for the necessary flexibility on how various legal issues are dealt with. Often, the courts first decide on how the civil proceedings will progress, taking into account the views of the parties. Courts can – and will – first issue interim judgments on, for example, jurisdiction, applicable law and limitation periods before parties proceed on the merits. Dutch courts are also very willing to accept jurisdiction against foreign defendants located in different countries. Moreover, the claimant’s costs in proceedings in the Netherlands are relatively low in comparison with other countries.

Power of attorney and mandates

The first avenues for bringing collective actions are power of attorney and mandating. The legal basis for a power of attorney is laid down in article 60, Book 3 of the DCC, stating that the representative can perform one or more judicial acts in the name of the principal. In follow-on proceedings, this principal is the claimant. Claimants bring their claims to a representative to which they give written authorisation that enables the representative to act on behalf of the claimant. The representative and the claimants are free to structure this agreement and are not subject to formal requirements.^[16] As a consequence of the agreement, the representative can handle all the tasks needed and can take all necessary decisions in its own name on behalf of the claimant. In this way, claimants can bring a bundle of individual claims where the interests are parallel to one representative. Claimants are not authorised to perform legal acts for which they have granted a power of attorney.

Mandates are governed by article 414, Book 7 of the DCC. In a mandate, a party (the agent) undertakes to perform one or more legal acts with third parties on behalf of another party (the principal). Agents may act in the name of the principals or in their own names. If it is not clear whether the agent must act in its own name or in the name of the principal, the agent may determine how it will act. The main difference from a power of attorney is that, with a mandate, the agent is under an obligation to act – that is, the agent must perform a legal act. Under a power of attorney, the representative is not obliged, but is authorised, to perform legal acts.

An advantage of using a power of attorney or a mandate is that there are no limitations in seeking redress. It can therefore extend to monetary claims. However, a possible disadvantage can be that there is a separate power of attorney or mandate required for each individual. The court thus must consider all circumstances relevant to each individual, leading to possible delays and extra costs.

Assignment model

A claimant can choose to transfer its claim to another party by way of assignment.^[17] Under the assignment model, the party who receives the claim is called a ‘claims vehicle’. Unlike under the power of attorney or mandate model, with assignment the original claimant cedes its ownership over the claim. The assignment model is the most used mechanism for bundling claims in cartel damages litigation in the Netherlands. Multiple claims vehicles have been established since the publication of the 2014 EU cartel damages directive and its implementation in the Netherlands in 2017.^[18] The claims vehicle itself owns and brings the claims of purchasers of products affected by a cartel.

In the case of Equilib v KLM, the court reasoned that bundling cartel damages claims based on the assignment model is a legitimate means to achieve efficient settlement of cartel damages.^[19] To be able to bundle the claims, the claims must be interrelated so there are reasons for efficiency to justify a joint hearing.^[20] The judgment of the court is only binding upon the injured parties who assigned their claims to the claims vehicle. This mechanism therefore lacks the possibility of binding non-active claimants.

After obtaining enough claims, the vehicle acts and submits them in its name and therefore bears the risk of the process and carries the costs of the procedure. The individual claimants are in principle not involved in the procedure anymore but must cooperate with the claims vehicle to seek to provide any relevant evidence. The validity of the assignment of claims is often the subject of debate in proceedings. The assignment must be made with a deed of assignment that must be ‘sufficiently determined’.^[21] The notice of assignment needs to contain the identity of the original claimant. When it is not sufficiently clear to the debtor who the original claimants are, the assignments are invalid. The Supreme Court of the Netherlands ruled that the fact that many assignments are involved does not detract from this requirement.^[22] Claims vehicles, furthermore, need to prove and substantiate each individual claim and its assignment.^[23] The separate claims still retain their substantive and procedural independence.^[24]

WCAM (opt-out representative settlement procedure)

In 2005, the WCAM was introduced, providing parties with the possibility of requesting the Amsterdam Court of Appeal to declare a mass settlement agreement generally binding.^[25] The settlement agreement must be concluded between a party causing the damage and a foundation or association with full legal capacity, which is called the representative. This representative must have the objective of representing the interests of the persons who have suffered damage due to the event in question. This objective must be contained in the representative’s articles of association. Often, the representative is a foundation set up specifically in the interest of the parties. The Amsterdam Court of Appeal may deny a request when the court finds the foundation or association is not sufficiently representative.^[26] Collective settlements can only be declared binding by the Amsterdam Court of Appeal in the first and final instance. An appeal to the Supreme Court is only possible if the Amsterdam Court of Appeal refuses to declare the settlement binding.

Besides ruling on the admissibility of parties (in particular, the representative), the court will be required to make a substantive assessment of the agreement reached. The settlement agreement must establish a commitment by the defendant to pay a certain amount of compensation to the injured parties.^[27] The injured parties may be divided into categories according to the nature and severity of the damages they have suffered. Each category can have its own condition of eligibility for compensation, and the court must assess how easy it is to receive a damages payment as an injured party. The design of the categorisation must be easy to implement in practice.^[28] It is important to note that the WCAM does not extend to an action for monetary compensation claims. The basic rationale of compensation is that it should be paid to (legal) persons who have suffered damages, and not to an organisation representing the interests of those (legal) persons.^[29]

The settlement agreement has binding effect on all injured parties covered by the settlement reached, including those who were not involved in the conclusion, if they did not make use of their right to opt-out.^[30] Thus, explicit acceptance is not required for a binding declaration, which is the most important distinction in comparison with the assignment model. Injured parties should have been given notice of the settlement agreement and the right to opt-out. Dutch injured parties are summoned by letter and by publication of such summons in newspapers or on the internet.^[31] When it comes to foreign injured parties, the court can order how they need to be given notice.^[32] Injured parties can make use of their opt-out right within three months after they have been given notice.^[33]

WAMCA (opt-out representative civil proceedings)

Under the WAMCA, interest groups, associations or foundations will act as a representative organisation that will secure the interest of a certain group or the general interest. These representative organisations are subject to strict admissibility requirements. For example, they must have a supervisory body, appropriate and effective mechanisms for representation in the decision-making process, sufficient means to bring a claim and an accessible internet page with information.^[34] The board of the representative organisation may not pursue a profit through the organisation. Further, the representative organisation must have made efforts to resolve the claim with the defendant amicably and must be able to prove this.^[35]

In addition, the representative organisation must have the objective of representing the interests of the persons who have suffered damage due to the event in question. In the case The Privacy Collective v Oracle and Salesforce, the court in Amsterdam ruled that the requirement to be sufficiently representative prevents a foundation or association from taking legal action without the support of a constituency.^[36] Therefore, it must be clear in advance that the organisation stands for a sufficiently large part of the group of affected victims. This differs from case to case and can only be determined based on the number of victims.^[37]

Given the strict requirement that the board may not pursue a profit through the organisation and the fact that the procedure involves high costs, representative organisations will be more dependent on the method of funding to litigate. A representative will usually need to attract third-party litigation funding (TPLF). With TPLF, a third party provides funding to a claimant to cover the costs of litigation in exchange for prospective compensation. In most cases, the third party is a professional investment fund dedicated exclusively to funding litigation. It is generally assumed that the litigation funder will receive a percentage of the realised damages. The Fortis v Ageas settlement showed that the court may critically review and challenge the compensation received by the representative organisations.^[38] The control over the claim and procedure must lie with the representative organisation, which forms a restriction on the role of the litigation funder. Consequently, it remains uncertain how courts will evaluate TPLF as they have wide discretion in this respect.

All collective claims must be filed by the representative organisation in a central register within two days of submitting the writ. This leads to publicity and the option for individuals to attach their claim. After registration of the collective claim in the central register, other representative organisations have three months to bring a collective claim in the same proceedings. The only requirement is that all collective claims concern the same event causing the damage.^[39]

The legal claims submitted by different representative organisations will be consolidated and the court will appoint the most suitable representative organisation, who will act as the exclusive representative (ER) to litigate on behalf of all the organisations. The ER thus represents the interest of all aggrieved parties. The court takes the following considerations into account in the appointment of an ER: the size of the collective whose interests are being represented by the representative organisation; the size of the financial interest of that collective; and other (previous) activities and collective claims of the representative organisation.^[40] After the appointment of the ER, the court determines the narrowly defined group of interested parties for which the ER will act. This consists of both the interested parties who have joined an interest group and those who have not. It is sufficient if the ER accurately defines which group of individuals it is defending. For example, ‘all consumers who have on date X purchased product Z from company Y’.^[41] Hence, the difference with the assignment model in which all claims remain individual claims is that WAMCA proceedings relate to a ‘narrowly defined group’. The fact that there is only one ER does not affect the possibility of other representative organisations appealing at a later stage of the procedure. The minister has confirmed that appeal is in principle possible and can be filed by ‘a party’ according to the ‘ordinary rules’.^[42]

Another important amendment under the WAMCA is that the claim should have sufficient nexus with the Dutch jurisdiction to prevent a pull-in effect of foreign parties. This nexus can be obtained if: the majority of the potential claimants have residency in the Netherlands; the event giving rise to the damage occurred in the Netherlands; or the defendant is domiciled in the Netherlands and additional circumstances indicate a sufficient connection with the Dutch legal sphere.^[43]

Where the court orders that the admissibility requirements are fulfilled and there is sufficient nexus with the Dutch jurisdiction, national injured parties can still make use of the opt-out mechanism. If they do, such injured parties are not bound by the judgment given in the proceeding between the ER and the defendant. An opt-out need not follow any formal requirements. Foreign injured parties are not bound by the judgment unless they opt-in after the appointment of the ER by the court.

When it comes to the settlement of the collective claim, the court must, where possible, divide the damages suffered by the injured parties into categories.^[44] The amount of compensation awarded must be reasonable and the interests of the injured parties for whom the collective redress is determined must be adequately safeguarded. Injured parties have another opt-out possibility if they do not find the collective settlement rewarding.^[45]

Final judgments in collective actions by a district court can be appealed to the competent court of appeal, unless expressly stated otherwise in the law or if parties have agreed to avoid an appeal. In general, an appeal must be lodged within three months of the date of the first instance judgment. The court of appeal fully reviews the merits of the case. A decision that the representative entity has no standing can be appealed. A decision that the representative entity has standing can only be appealed by the defendant if the court grants the defendant the right to do so. The Supreme Court has jurisdiction to hear appeals against judgments of the courts of appeal and in exceptional cases against judgments of the district courts. Supreme Court proceedings do not offer a full review and it will only consider whether the court of appeal has made errors of law or procedural errors.

The more stringent admissibility criteria could prevent the WAMCA from replacing the assignment model as the model of choice in the private enforcement of competition law in the Netherlands. Claimants still have the option to choose how they want to initiate the follow-on procedure. In the recent judgment of the Amsterdam court in the Trucks cartel, the court notes that the WAMCA does not prescribe that collective actions can only be brought under the WAMCA. It underlined that the WAMCA is intended to expand the existing possibilities for collective actions and to provide large groups of injured parties, each with a relatively small claim, with an adequate legal remedy. Therefore, claims vehicles do not need to comply with the safeguards of the WAMCA.

Conclusion

The Dutch legal system regarding collective actions has a wide range of possibilities for (foreign) injured parties. There is no mandatory redress scheme and therefore all possible mechanisms continue to exist alongside each other and still have the opportunity to evolve in the coming years. In particular, for instance, the WCAM and WAMCA can be used side-by-side in claims. Using one mechanism does not exclude the other mechanism; however, a potential effect of the WAMCA is that individual claims-by-claims vehicles can be suspended until the court has decided on collective claims brought under the WAMCA, if the claims vehicles fall under the narrowly defined group of interested parties. Claims vehicles can, however, opt-out of the WAMCA procedure.

Given the choice and flexibility of collective redress mechanisms in the Netherlands, the country will remain one of the most popular European jurisdictions for collective actions and in particular for follow-on claims.

Notes

^[1] Before 1 January 2020, under the former representative action regime, it was only possible to request a declaratory judgment regarding the unlawful behaviour. In ‘follow-on proceedings’ individuals had to request for damages considering the declaratory judgment.

^[2] See EJ Zippro, Private law enforcement of competition law, Kluwer: Deventer 2009, p 341.

^[3] Amsterdam Court of Appeal, 21 July 2015, ECLI:NL:GHAMS:2015:3006 (Kemira v CDC).

^[4] Court of Rotterdam, 26 September 2018, ECLI:NL:RBROT:2018:8001 (Van Gelder v Shell).

^[5] Court of The Hague, 1 May 2013, ECLI:NL:RBDHA:2013:CA1870 (Shell v CDC).

^[6] Court of Amsterdam, 7 March 2012, ECLI:NL:RBAMS:2012:BV8444 (Equilib v KLM).

^[7] Court of Rotterdam, 17 July 2013, ECLI:NL:RBROT:2013:5504 (Stichting Elevator Cartel Claim v Kone).

^[8] Court of Amsterdam, 27 July 2022, ECLI:NL:RBAMS:2022:4466 (Stichting Trucks Cartel Compensation v DAF Trucks).

^[9] Arnhem-Leeuwarden Court of Appeal, 26 November 2019, ECLI:NL:GHARL:2019:10165 (Alstom v TenneT).

^[10] Arnhem-Leeuwarden Court of Appeal, 29 May 2018, ECLI:NL:GHARL:2018:4876 (ABB v TenneT).

^[11] Court of Rotterdam, 26 September 2018, ECLI:NL:RBROT:2018:8001 (Van Gelder v Shell).

^[12] EC, Antitrust: Commission fines producers of TV and computer monitor tubes €1.47 billion for two decade-long cartel, Press release, IP/12/1317, 5 December 2012.

^[13] District Court Oost-Brabant, 19 October 2022, ECLI:NL:RBOBR:2022:4506 (Consumentenbond v Philips).

^[14] Submitted to the Court of Amsterdam on 18 October 2022, (Stichting App Stores Claim v Google). The writ can be found here (in Dutch): https://www.rechtspraak.nl/SiteCollectionDocuments/RBAMS-Stichting-app-stores-claims-v-alphabet-inc-en-google-llc-cs.pdf.

^[15] According to the Dutch foundation, Apple and Google have abused these dominant positions by requiring users to pay for apps and in-app purchases through their own payment systems, which typically charge an exorbitant 30 per cent commission.

^[16] The Law Review, The Third Party Litigation Funding Law Review: Netherlands, Rein Philips, November 2021, and District Court Noord-Holland, 1 June 2022, ECLI:NL:RBNHO:2022:5022 (Aviclaim v Deutsche Lufthansa Aktiengesellschaft).

^[17] Articles 3(84) and 3(94) of the DCC.

^[18] The claims vehicle is often a commercial (foreign) funder that does not have any personal interest in the claims.

^[19] Court of Amsterdam, 13 September 2017, ECLI:RBAMS:2017:6607 (Equilib v KLM), and the more recent Court of Amsterdam, 27 July 2022, ECLI:NL:RBAMS:2022:4466 (Stichting Trucks Cartel Compensation v DAF Trucks).

^[20] J Veldhuis, ‘Cumulatie in het burgerlijk procesrecht’, Advocatenblad, 2014, ep 4, p 47.

^[21] Article 3(94)(1) of the DCC.

^[22] Supreme Court, 27 November 2009, ECLI:NL:HR:2009:BH2161 (Word Online International).

^[23] Amsterdam Court of Appeal, 10 March 2020, ECLI:NL:GHAMS:2020:714 (KLM v Equilib).

^[24] B Braat and N Rosenboom, ‘Privaatrechtelijke handhaving van het mededingingsrecht en de collectieve schadeafwikkeling’, SEW, 2018, ep 1, p 15.

^[25] Article 7(907)(1) of the DCC. The first time a settlement agreement was declared binding was by the Court of Amsterdam in 2006, Amsterdam Court of Appeal, 1 June 2006, ECLI:NL:GHAMS:2006:AX6440 (Stichting DES Centrum).

^[26] Article 7(907)(3)(f) of the DCC.

^[27] Article 7(907)(2) and article 7(907)(3) of the DCC.

^[28] Article 7(907)(2) of the DCC.

^[29] A van der Krans, ‘Van WCAM naar WAMCA: class actions in Nederland?’, Onderneming en Financiering, 2019, ep 3, p 61.

^[30] Article 7(907–910) of the DCCP and articles 1013–1018 of the DCC.

^[31] Article 1013(5) of the DCCP.

^[32] Article 1013(5) of the DCCP.

^[33] Article 7(908)(2) of the DCC.

^[34] Articles 3(305)(a)(1) and 3(305)(a)(2) of the DCC.

^[35] Article 3(305)(a)(3) of the DCC.

^[36] Court of Amsterdam, 29 December 2021, ECLI:NL:RBAMS:2021:7647 (The Privacy Collective v Oracle).

^[37] Court of Amsterdam, 29 December 2021, ECLI:NL:RBAMS:2021:7647 (The Privacy Collective v Oracle).

^[38] Rein Philips, 22 November 2021, ‘The Third Party Litigation Funding Law Review: Netherlands’, The Third Party Litigation Funding Law Review – The Law Reviews.

^[39] AAL Oving, ‘De WAMCA onder de loep genomen’, Tijdschrift voor Vergoeding Personenschade, 2020, ep 1, p 11.

^[40] Article 1018(e)(1) of the DCCP.

^[41] Kamerstukken II, 2016/17, 34608, No. 3, p 19.

^[42] E Hoogervorst, C Klaassen and A Knigge, ‘Hoger beroep en cassatie in een collectieve actie op grond van de WAMCA: een blik vooruit’, Tijdschrift voor Civiele Rechtspleging, 2021, ep 4, p 112.

^[43] Article 3(305)(a)(3)(b) of the DCC.

^[44] Article 1018(i)(2) of the DCCP.

^[45] Articles 1018(h)(5) and 1018(f)(1–4) of the DCCP.