Netherlands: Private Antitrust Litigation
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Private antitrust enforcement has a well-established basis in the Netherlands. It is expected that the EU Damages Directive (Directive 2014/104/EU) that was implemented in Dutch legislation and entered into force on 10 February 2017, will contribute to further development of antitrust litigation in the Netherlands. Compelling benefits of the Dutch legal system for claimants remain to be the relatively low litigation costs, expeditious proceedings, a clear readiness by the courts to accept jurisdiction and a flexible approach towards tailor-made case management solutions. In addition, the Netherlands boasts effective tools for plaintiffs, such as the possibility for a representative entity to bring a collective action on an ‘opt out basis’ under article 3:305a of the Dutch Civil Code (the DCC). Under current Dutch law, the representative entity is not entitled to claim monetary damages. A legislative proposal currently under review by the legislator aims to remove this constraint. Another relevant tool is the collective settlement tool under which a court can declare a settlement legally binding upon a certain class of plaintiffs (with the option for plaintiffs to opt out). Furthermore, in the near future, litigation may be conducted in English. This contribution addresses some of the recent key developments in private antitrust litigation.
Developments in collective damages action legislation
There are currently two legislative proposals pending before Parliament that are relevant for civil antitrust litigation in the Netherlands. A legislative proposal that was submitted to Parliament on 16 November 2016 intends to change the DCC provisions relating to collective damages to enable claimants to claim collective damages in one go instead of having to obtain a declaratory judgment first. The proposal also includes new rules introducing lead representative organisations which are to represent the collective of claimants and rules on class certification. This legislative proposal has been amended in January 2018. Important changes are that in the original proposal, the District Court of Amsterdam had sole jurisdiction to deal with collective claims which has now been changed making the regular rules on jurisdiction applicable. Also, the new proposal more narrowly defines the possibility for Dutch plaintiffs to ‘opt out’ and introduces a possibility for foreign plaintiffs to ‘opt in’. Furthermore, also new is the introduction of a second possibility for plaintiffs to opt out in case a collective settlement is agreed and declared binding by the court.
In addition, in July 2017, a legislative proposal was submitted for international trade dispute proceedings introducing the possibility to conduct the proceedings in English. Overall, these two proposals are likely to further enhance private antitrust litigation, as collective damage claims will be easier to pursue, also by foreign claimants.
Follow-on damages claims
The District Court of Amsterdam rendered two interesting follow-on judgments initiated by claim vehicles in the aftermath of the air cargo cartel (Case No. ECLI:RBAMS:2017:5512 and Case No. ECLI:RBAMS:2017:6607). The claim vehicles argued that a large group of claimants had transferred claims entitling them to pursue these claims in court. The defendants argued that the claim vehicles had not provided evidence of the transfer of the alleged claims and had therefore insufficiently substantiated that they actually had a right of claim. The defendants furthermore argued that the transfer of claim was in any case null and void. The District Court ruled that the burden of proof on the validity and transfer of the claim resides with the claimant. Subsequently, the claimant vehicles were given the opportunity by the court to further substantiate their claim with:
- the title of transfer (the debt purchase agreement);
- a copy of the deed of assignment; and
- proof of authority of the signatory party that signed the deed of transfer.
Although the defendants raised a number of reasons why the transfers were invalid, the court ruled in an interim judgment that the transfer and its validity were sufficiently proven. A particular defence that was argued (in case ECLI:RBAMS:2017:6607) was that the assignments were infringing the prohibition on ownership of collateral and were contrary to public order because the claim vehicles would under the debt purchase agreement keep part of any possible damages that could be awarded. The court ruled, however, that the fact that the claim vehicles receive a percentage of the possible damages as part of a debt purchase agreement is not a breach of the prohibition on ownership of collateral. Also the interdependence between the purchase price and the amount that is awarded by the court does not render the transfer illegal. On the point of public order, the court noted that such damages claims can substantially contribute to the enforcement of effective competition in the European Union and that bundling of claims through assignments to a claim vehicle can be a legitimate means to pursue follow-on damages claims.
The Dutch grid operator TenneT brought a successful follow-on damages claim before the District Court of Gelderland (Case No. ECLI:NL:RBGEL:2017:1724). The proceedings were initiated following the decision of the European Commission regarding the Gas Insulated Switchgear cartel (case COMP/F/38.899 – Gas insulated switchgear). TenneT claimed that it had purchased gas insulated switchgear from ABB (a Swiss manufacturer) during the infringement period and alleged to have paid an overcharge of €23.1 million as a result of the infringement. In an earlier judgment of 16 January 2013 (Case No. ECLI:NL:RBONE:2013:BZ0403), the District Court had already found ABB liable for any potential damage suffered by TenneT resulting from the infringement. The court now ruled in a judgment of 29 March 2017 on the quantum of damage. TenneT had submitted an report by an economist in which the price of a component of the switchgear was compared to the price paid outside the infringement period and alleged that on average 58 per cent of the price paid during the infringement period was overcharge. ABB had contested the claim and the report with a counter economic report. ABB argued on the basis of original cost calculation documents of the disputed switchgear retrieved from its archives, that the price paid by TenneT consisted almost entirely of actual manufacturing costs and a profit margin that was significantly below the overcharge claimed by TenneT. It further argued that the costs were not abnormally high for the time of the sale (1993) and that the lower price after the infringement period (2005) was due to implemented innovations and cost reductions over the years. The court, however, dismissed ABB’s defence, ruling that the internal profit margins of ABB were not relevant for determining the damage alleged by TenneT as TenneT did not request the confiscation of unlawfully obtained gains and that ABB should have provided the raw material and production costs of the switchgear instead. Furthermore, ABB had argued that even if TenneT had suffered any potential damage as a result of the infringement, it had passed that damage on to its purchasers via the electricity grid tariffs. The court also dismissed this passing on defence although it acknowledged that it can be assumed TenneT did pass on the costs of the disputed switchgear to its purchasers. The court dismissed the passing on defence because it considered that ultimately consumers paid the damage via their electricity bills and that TenneT’s purchasers (or consumers) would likely not pursue a claim against ABB. It therefore ruled that allowing the passing on defence would lead to unreasonable results. In its judgment, the court awarded TenneT €23.1 million in damages, increased with legal interests and costs. This judgment is currently under appeal at the Court of Appeal of Arnhem-Leeuwarden.
Stand-alone damages claims
Stand-alone follow-on actions may include actions before civil courts concerning challenges to commercial restrictions, such as non-compete obligations, restrictive trade association rules and commercial restrictions in the supplier-distributor relationship (eg, exclusivity, purchase obligations, bans on online sales). Substantiation of claims is usually more difficult in stand-alone cases because there is no decision of a competition authority to rely on.
In this regard, in a case that was pending before the District Court of Noord-Holland (Cas No. ECLI:NL:RBNH:2017:6277), the claimant failed to sufficiently substantiate its claim that the defendant had terminated an agency agreement as a result of a concerted practice that prima facie violated competition rules. Prijsvrij, a holiday package provider complained that one of its travel agents (Corendon) had unlawfully terminated its agency agreement. Prijsvrij claimed that the termination was the result of concertation with a competitor and therefore violated the cartel prohibition. The claim was extensively contested by Corendon that substantiated that the termination was an autonomous strategic decision. Given the defence submitted by Corendon, the court ruled that Prijsvrij should have provided evidence of the violation of competition law. Since Prijsvrij had not provided sufficient evidence, its claim was dismissed.
An antitrust defence was successful in a case that was litigated before the Court of Appeal in Amsterdam. The Court of Appeal of Amsterdam had to rule on the duty for the claimant to substantiate its claim in a judgment of 13 June 2017 (Case No. ECLI:NL:GHAMS:2017:2270). In that case ML Tours relied on an agreement that violated competition law. ML Tours, however, argued that the de minimis exception applied to the agreement and that the agreement therefore had binding force. ML Tours, however, did not substantiate why the de minimis exception would apply and only stated – without substantiation – that the relevant market shares of the parties to the agreement were below 10 per cent and that the agreement had no appreciable effect on competition. The Court of Appeal noted, however, that ML Tours had not defined the relevant market and did not indicate which parties were active on the relevant market and what their market shares were. In addition, the Court of Appeal ruled that ML Tours should have explained why the agreement would not have an appreciable impact on the market, in particular since a market sharing agreement qualifies as a hardcore restriction of competition that is presumed to have an impact on the market. ML Tours also failed to explain why trade between EU member states was not affected (in which case European competition law would have been applicable). The court, therefore, ruled that the market sharing agreement was null and void and dismissed ML Tours’ claim.
In another case that was pending before the Court of Appeal of ‘s-Hertogenbosch (ECLI:NL:GHSHE:2017:3114), the Court of Appeal had to rule on a dispute between a bakery and a supermarket. The bakery had concluded a lease agreement with the supermarket that included a clause that the supermarket was prohibited from selling bread or other baked goods. The supermarket argued before the Court of Appeal that the clause was in breach of competition law and therefore null and void. The Court of Appeal, however, dismissed these arguments because the supermarket had not sufficiently substantiated the breach of competition law. It had, inter alia, not furnished sufficient facts regarding the product market. The supermarket should have, according to the Court of Appeal, considered whether the relevant geographic market was local, regional or larger in scope. In addition, the supermarket should have asserted whether the clause could appreciably restrict competition.
In the telecoms sector, the District Court of Rotterdam (Case No. ECLI:NL:RBROT:2017:7372) had to rule on alleged abuse of a dominant position by telecoms provider KPN. Vodafone and KPN had an agreement from 2007 until 2011 regarding the supply of Virtual Internet Services. In 2011, while the agreement was still in place, Vodafone initiated proceedings against KPN, alleging that KPN had abused its dominant position by consistently failing to meet the obligations under the agreement. According to Vodafone, KPN had a dominant position on the virtual internet services market resulting from the fact that KPN was the sole player on that market. The District Court, following the Tomra case of the Court of Justice (Case No. ECLI:EU:C:2012:221), ruled that a dominant position exists where an undertaking is capable of preventing actual competition on the relevant market through the ability of behaving with a certain degree of independence towards its competitors and customers. According to the District Court, Vodafone could have approached several other potential providers for virtual internet services, noting that for example Tele2 had contracted Samsung to develop a similar service. Moreover, Vodafone had repeatedly stated that it considered developing elements of virtual internet services itself. The District Court held that an objective test is required. For the test it is not decisive whether Vodafone perceived that it only had a single possible partner as a result of a particular strategy or preference, but rather whether Vodafone’s competitors were able to develop a platform without the use of KPN. Given the fact that other competing undertakings were active in virtual internet services, the District Court ruled that KPN had no dominant position on the market in the relevant period.
Another interesting judgment (Case No. ECLI:NL:RBAMS:2018:1654) concerns the real estate website of the Dutch association of real estate brokers (NVM). A rival association of real estate brokers alleged that NVM’s digital platform (Funda) held a dominant market position and that Funda abused this position by placing real estate brokers that were not a member of NVM at a competitive disadvantage. The digital platform brings together real estate supply and demand. The District Court of Amsterdam had to rule on whether Funda held a dominant position and whether abusive behaviour could be established. In that regard, the District Court appointed three court experts that were asked to advise the court on the relevant market and the position of funda on that market. Following an economic assessment, the court experts advised the court that:
- the relevant market is the market for websites for the sale of private homes in the Netherlands; and
- the digital platform held a dominant position on that market in the relevant period (1 July 2009 and 6 January 2017).
The District Court accepted these conclusions and assessed whether NVM applied dissimilar conditions to equivalent transactions with other trading parties and whether thereby these other parties were placed at a competitive disadvantage. The District Court held that it was established that NVM applied dissimilar conditions to equivalent transactions but inquired further whether this had put the claimant on a competitive disadvantage. In this regard, the District Court reiterated the case law of the European Court of Justice and ruled that it is insufficient to establish only that discrimination had taken place. It should, in addition, be likely that discrimination impeded competition. The court ruled in this regard that discrimination does not automatically mean that there is an impact on competition as the claimant had alleged. The claimant had not provided any facts or evidence of the alleged competitive disadvantage. Furthermore, the court experts indicated in their report that they had not found any evidence of a competitive disadvantage for the claimant or its members. On this basis, the District Court ruled that it could not be established that Funda had abused its dominant position and it dismissed the claims.
Clearly, claimants not only bring a large number of follow-on damages claims but that also stand-alone cases are increasingly brought before the Dutch courts. Furthermore, both follow-on as well as stand-alone claims apply that the civil courts as well as claimants become increasingly sophisticated in their assessments and litigation of such claims. The cases described above demonstrate that claimants cannot successfully bring a claim if the claim is not sufficiently substantiated with facts and economic evidence. Courts demand a solid basis including factual and economic evidence demonstrating the competition law violation (in case of stand-alone claims) and the impact on the market or claimant before providing relief or awarding damages.
Private antitrust litigation is a fast-growing segment in the Netherlands. Increasingly large claims (such as the air cargo claims) are brought before the courts in the Netherlands and courts have demonstrated to be able to process these cases in a diligent and effective way. Also, regardless of the relative substantial evidentiary threshold for stand-alone cases, claimants continue to be able to successfully bring cases to court, provided that they have done their ‘homework’. The Netherlands continues to be one of the most popular jurisdictions in Europe for follow-on damages claim cases. This trend is likely to increase when the legislative proposals will enter into force.