Netherlands: Private Antitrust Litigation
The Dutch civil courts continue to provide a popular platform for conducting private antitrust litigation. Substantial and growing activity can be identified in terms of both follow-on damage claims and stand-alone actions. Driving factors include the availability of efficient and relatively expeditious procedures as well as predictability in terms of litigation costs. It is expected that the implementation of the EU Damages Directive (due at the end of 2016) will only encourage this upwards trend.
The evidentiary threshold for successful stand-alone antitrust claims (ie, claims not supported by decisions of competition authorities) has been set relatively high by the Dutch Supreme Court in the case IATA/ANVR (Case No. ECLI:NL:HR:2012:BX0345). The claimant is required to substantiate its claim with sufficiently convincing (economic) facts and circumstances, including relevant market analysis. Lower courts consistently follow this test, in many instances resulting in dismissal of competition-law based claims because of insufficient substantiation. Practice shows that this does not necessarily discourage potential claimants. It means, however, that – save in clear-cut cases – sufficient factual substantiation (including economic analysis) will in principle be required to bring a successful stand-alone claim. Indeed, a substantial number of claims have been accepted by the Dutch civil courts.
Anticompetitive agreements (article 101 TFEU / article 6 of the Dutch Competition Act)
Stand-alone claims based on the EU and Dutch provisions on anticompetitive agreements are often invoked by claimants to challenge restrictions in commercial arrangements. In a substantial number of cases, the defendant is a supplier which is challenged by either a customer or a competitor for allegedly having supply or distribution agreements that contain anticompetitive restrictions (eg, long-term exclusivity clauses in distribution contracts).
Additionally, article 101 TFEU and article 6 of the Dutch Competition Act are routinely invoked as a defence against claims that a certain clause or agreement is enforceable (the argument being that the clause or agreement under scrutiny is null and void because it violates competition law). A clear example is the situation where a defendant, confronted with a claimant that wants to hold the defendant to a non-competition clause, argues that the clause violates the cartel prohibition.
The interim relief procedure that is available in the Netherlands plays an important role in these types of cases, as it provides for a relatively fast and straightforward manner to obtain a provisional ruling on the validity of allegedly anticompetitive restrictions. In addition, the interim relief court is able to impose orders with immediate effect, including with the effect of prohibiting restrictive behaviour (eg, the application of exclusivity) or a positive obligation to rectify the harm (eg, reinstatement of a terminated supply agreement). A cogent example of the effectiveness of the interim relief procedure is the 2011 decision by the District Court of Den Bosch in a case instigated by Nestlé against Mars, regarding the latter’s category management programme, which consisted of bonuses in the form of free supplies for the retailer (petrol stations) in exchange for observing requirements regarding the display and offering of Mars products. Nestlé claimed that Mars’ programme resulted in a violation of article 6 and article 24 of the Dutch Competition Act by having an exclusionary effect vis-à-vis Nestlé.
The interim relief court found that there were sufficient preliminary indications that the Mars programme could result in foreclosure of Nestlé from the market, taking into account Mars’ market position. The court ordered Mars to cease further implementation of its category management programme.
In the subsequent procedure on the merits (Case No. ECLI:NL:RBOBR:2013:4356), the District Court of Oost-Brabant examined Mars’ programme in depth, leading to a preliminary finding of a restriction of competition. The Court assessed Nestle’s claims by applying an abuse of dominance type reasoning in the context of an anticompetitive agreements framework of analysis. The Court considered that Mars’ programme resulted in a restriction of competition and ordered the appointment of an expert to determine whether there was an appreciable effect on competition.
Two notable recent cases further confirm that Dutch courts are not afraid to accept stand-alone damage claims. In the first – somewhat atypical – case, HEM/CBL & Jumbo (Case No. ECLI:NL:RBDHA:2016:2480), the claimant successfully argued that it was the victim of an anticompetitive collective boycott by some large Dutch supermarket chains in respect of the claimant’s age verification service (in case of purchases of alcoholic drinks by minors). The supermarkets had coordinated, including within their trade association, on the manner in which new legislation banning sales of alcoholic drinks to minors would be implemented, effectively, although not explicitly, ruling out the option to procure services from the claimant. The Court found that this constituted a tort. Consequently, the claimant was entitled to damages and the arrangements between the supermarket chains involved were declared null and void.
The case makes clear that market operators that are able to demonstrate being substantially affected by anticompetitive behaviour have clear prospects of obtaining damages in civil court. It is also a (further) warning to market operators that the line between topics which can and cannot be discussed within the context of trade associations is fine and can be crossed, also inadvertently.
The second case concerned an interim relief procedure before the District Court of Noord-Holland (CZAV/DGS, Case No. ECLI:NL:RBNHO:2016:1837). CZAV and DGS are both suppliers of union seeds. CZAV had been procuring part of its union seeds needs from DGS for a number of years. When DGS terminated the contract, CZAV claimed that this was in violation of competition law, as the termination would be a punishment for not following resale prices suggested by DGS. In addition to considering that the termination may constitute an abuse of dominance, the preliminary finding was that DGS may have engaged in a prohibited concerted practice in attempting to discipline the pricing behaviour of its customers. Consequently, the court ordered that the contract be reinstated for a period of seven months, allowing the claimant to prepare proceedings on the merits.
The case is a clear reminder that the interim relief procedure can provide an effective – if temporary – remedy, without a need to pass the evidentiary threshold which applies to in-depth procedures.
Abuse of dominance (article 102 TFEU / article 24 of the Dutch Competition Act)
Enforcement of the EU and Dutch abuse of dominance provisions by the Dutch Competition Authority (ACM) is infrequent. In recent years, the ACM has not taken any enforcement decisions, while rejecting several complaints by third parties on the basis of a lack of priority. This is identified as an additional driving factor for market operators affected by allegedly abusive behaviour to seek legal remedies in civil court.
That said, in line with the IATA-standard of proof described above, compelling substantiation is required in order to establish a dominant position and abuse to the requisite standard. In many cases, this continues to lead to a dismissal of civil claims, due to the often complex economic factors relevant to establishing abuse of dominance. The information needed for substantiating dominance can be difficult to obtain for a private party which is why the investigative powers of a competition authority are often required through an administrative procedure.
To illustrate, in a relatively recent case, civil proceedings were unsuccessfully brought by container transshipment company ECT against the Port of Rotterdam Authority (Port). ECT argued that the Port had favoured two competitors over ECT, abusing its dominant position. The District Court of Rotterdam (Case No. ECLI:NL:RBROT:2014:7824) held in 2014 that the relevant product market was that for the letting of docklands. According to the Court, ECT had insufficiently substantiated its claim that the Port had a dominant position on this market. The Court considered that, instead of substantiating the Port’s market share, ECT had reasoned that, due to the long-term letting agreements and large-scale investments in the harbour, which could only be recovered in the long term, it was ‘locked in’ and could not realistically switch to a container port competing with the Port of Rotterdam or threaten, in negotiations with the Port, to switch to a competing port. Further, ECT argued that the Port’s dominant position was illustrated by its imposition of unfair and discriminatory trading terms and conditions on ECT. The Court, however, considered that the long-term letting agreements protected lessees from price increases and enabled them to recover investments without running the risk that the Port would terminate the letting agreement. With regard to the claimed unfair and discriminatory trading terms and conditions, the Court considered that the negotiations and discussions between the Port, ECT and other market players created the impression that in reality the Port was unable to behave independently from the container transshipment companies. In negotiations, the Port had to deal with large, professional and international market players able to exercise countervailing power.
Similarly, a 2013 judgment of the District Court of Rotterdam (Case No. ECLI:NL:RBROT:2013:CA0372) in interim proceedings demonstrates the difficulty of sufficiently substantiating both a dominant position and an abuse. It concerned an alleged refusal to supply by Suiker Unie. The claimant had submitted an economic report in which it was set out that Suiker Unie had a dominant position on the market for pulp, as well as on an alternative wider market. The report argued that even on a wider market the market share of Suiker Unie would be 67 per cent. The District Court of Rotterdam considered that on the basis of past decisions from the European Commission and the ACM there were sufficient alternative products available. It therefore dismissed any finding of dominance of Suiker Unie. In addition, it argued that even if dominance were to be assumed, the refusal to supply by Suiker Unie did not result in the complete removal of all competition on the relevant market, as there were three suppliers active in the same market. Furthermore, it considered that the product was not indispensable and that there was an objective justification for the refusal to supply (Suiker Unie argued that it would be able to operate more efficiently if it had to supply fewer distributors).
In the 2014 Niigata case (Case No. ECLI:NL:RBROT:2014:8245), the District Court of Rotterdam found that even if a company has a dominant position, it should in principle be free to deal with whom it pleases and that it is allowed to make aggressive (pricing) offers in order to maintain customers. This would only be different if the refusal to deal or the offers resulted in the structural exclusion or exploitation of third parties in order to strengthen a dominant position. The claimant had not sufficiently demonstrated this.
An example of a successful claim concerns the dispute between ferry service provider TSM and the Dutch state. TSM had an obligation to provide a regular service and an express service on two routes to two Dutch islands, pending the granting of an irrevocable licence by the state. Ferry service provider EVT was permitted to provide ferry services alongside on one route, provided that these would not hinder the exercise of the public service contracts. TSM subsequently announced that it was no longer able to ensure the required level of service as its activities were loss-making due to EVT’s competition and that it was, therefore, forced to cut back on the ferry schedule, which caused considerable social unrest. The state consequently terminated its rental agreements with ferry service provider EVT. In interim injunction proceedings (Case No. ECLI:NL:RBDHA:2013:18370) the District Court of The Hague considered that this termination did not constitute an abuse by the Dutch state (leaving aside the questions of whether the state could be considered an undertaking and whether termination of the rental agreement could be considered a refusal to supply), as it was objectively justified by the compelling public interest of accessibility of the islands concerned. The Court of Appeal of The Hague, however, set aside this ruling (Case No. ECLI:NL:GHDHA:2014:149), on the grounds that it was not convinced of the necessity of the termination of the agreements and considered that the state had not sufficiently explored alternatives. This was despite repeated initiatives by EVT that a review of TSM’s financial situation was not possible and it was insufficiently clear that TSM’s financial distress had been caused by EVT’s operation. It could not be excluded that the proceedings on the merits would establish an abuse of dominance by the state.
Another example of a successful abuse of dominance claim concerns EMS/Equens. The District Court of Midden-Nederland in Equens (Case No. ECLI:NL:RBMNE:2013:3245) found that Equens was dominant on the upstream market for (transport) network services for credit card transactions and that it had abused this dominant position on the downstream market for acquiring (consisting of the processing of credit card payments and contracting merchants), by impeding and obstructing the switching of customers to acquirers other than its subsidiary Paysquare. The Court concluded that Equens was dominant on the basis of the fact that 70 per cent of payment terminals were connected to the Equens network. The abuse consisted of Equens applying a waiting period when a merchant wanted to switch to an acquirer (such as EMS) other than Paysquare. During the waiting period, Paysquare would contact the merchant in question and would make an alternative offer. Although an abuse of dominance was successfully claimed in this case, the Court did not grant the full damages claimed by EMS, as it considered that not all claimed damages had been sufficiently substantiated.
Follow-on damages claims
Claimants of damages caused by infringements of competition law following a decision by a competition authority are often in a position to be able to choose between different fora to bring claims. In practice, together with the UK and Germany, the Netherlands has proven to be the most popular jurisdiction for follow-on litigation, with no signs that this will change in the imminent future.
One driving factor in this regard is that litigation costs are relatively predictable and limited in the Netherlands because the successful party cannot obtain full recovery of litigation costs. The financial risks of losing a case are therefore limited. Also, the Dutch legal system does not provide for extensive discovery obligations (unlike in the United Kingdom or the United States) when initiating a case. Claimants therefore do not have to take account of such potentially extensive costs. That lack of disclosure is not a disadvantage for claimants as they have the possibility to file a motion to the court for the disclosure of (sufficiently identified) documents – also before they have brought a claim to court – without having to produce documents themselves (except if this is requested by the defendant party and allowed by the court). Furthermore, claimants could request the court for preliminary witness hearings.
In addition, the Dutch legal system also provides for a system to file collective claims and for collective settlements that have extraterritorial reach.
Several professional and private claimants have embraced the advantages of litigating in the Netherlands and lodged cases before the Dutch Courts. Examples are the multimillion-euro claim brought by claim vehicle Cartel Damage Claims (CDC) before the District Court of The Hague against four paraffin wax producers following the Commission Decision of 1 October 2008, Case COMP/39181 – Candle Waxes. In that case, damages were claimed for alleged overcharges in the purchase price paid by non-Dutch manufacturers of inter alia candles. In addition, three large claim cases are pending following, inter alia, the (now annulled) Commission Decision of 9 November 2010, Case AT.39258 – Airfreight. Other cases include Sodium Chlorate, GIS, Elevators and Escalators, Dutch Bitumen, Animal Feed Phosphates and Electrical Supplies.
A number of recent judgments have allowed claimants to obtain additional clarity on the legal framework governing follow-on claims. This is identified as a factor which may foster the development of increasing follow-on claims in the Netherlands.
In terms of establishing jurisdiction, defendants in several cases have unsuccessfully tried to fend off damages claims arguing that the Dutch courts lacked jurisdiction. In the CDC/Kemira case (Case No. ECLI:NL:GHAMS:2015:3006) the Court of Amsterdam assumed jurisdiction vis-à-vis Kemira Chemicals OY (Kemira), which is domiciled in Finland. The case concerns a claim by CDC for damages that allegedly resulted from the infringement established by the European Commission in the Sodium Chlorate case (Case COMP/38.695 – Sodium Chlorate). CDC claimed damages in the Court of Amsterdam from Kermira, Akzo Nobel NV (Akzo Nobel) and EKA Chemicals AB. Akzo Nobel is domiciled in the Netherlands for which the Court established jurisdiction on the basis of article 2(1) of the EEX Regulation. The Court assumed jurisdiction in respect of the claim against Kemira, in order to exclude the risk of contradictory decisions if different courts would deal with the cases against Kemira and Akzo Nobel (article 6(1) of the EEX Regulation).
One of the criteria for the exception of article 6(1) of the EEX Regulation to apply is that the parties in the proceedings are in the same situation in fact and law. Kemira appealed the decision of the Court of Amsterdam stating that the situation of Akzo Nobel is different in fact and law and therefore the Court cannot establish jurisdiction on the basis of article 6(1). Kemira stated that, according to the Commission decision, Akzo Nobel did not directly participate in the infringement but was held jointly liable with its (indirect) subsidiary on the basis of ‘parental liability’. This is the rebuttable presumption established under EU competition law that a parent company that fully owns a subsidiary controls the commercial behaviour of that subsidiary and can therefore be held jointly liable for the conduct of that subsidiary.
The Court of Appeal of Amsterdam dismissed the appeal, ruling that the case is not different in fact or law. According to the Court of Appeal the fact that Akzo Nobel did not factually participate in the infringement is not relevant as European competition law finds liability on the basis of parental shareholding. Consequently the conclusion of the European Commission that Akzo Nobel participated in the infringement and is held jointly liable for the infringement entails that Akzo Nobel and Kemira are in the same situation in fact and law.
In the same case, the Court of Appeal of Amsterdam dismissed the motion of Kermira that the case should be referred to arbitration. Kemira submitted that the purchase agreement stipulated clearly that any dispute concerning the sale of sodium chlorate should be settled in arbitration. The Court of Appeal ruled, however, following a broad interpretation of ECJ case CDC/Akzo Nobel (case C-352/13, ECLI:EU:C:2015:335), that arbitration clauses that only in the abstract refer to disputes do not apply to disputes arising from anticompetitive conduct by one of the contracting parties. According to the Court of Appeal, it is not foreseeable for the other party that agreed to the arbitrage clause that it would also cover anticompetitive conduct by the other party. Consequently it cannot be assumed that the dispute concerning anticompetitive behaviour originates from (or is covered by) the contractual relationship between the parties. This may be different if the arbitration clause explicitly indicates that disputes regarding anticompetitive conduct are also covered. The District Court of Rotterdam reached a similar conclusion in a damage claim brought by a foundation representing residential building associations against elevator manufacturers, following a competition infringement by the four largest elevator manufacturers.
In the case TenneT/Alstom (Case No. ECLI:NL:RBARN:2011:
BU3548), the District Court of Gelderland assumed jurisdiction regarding a claim against several Alstom entities which were all domiciled in France. The case concerned TenneT, the Dutch system operator of the high-voltage electricity grid which purchased gas-insulated switchgears (GIS) from Alstom for a switching station in the north of the Netherlands in 1993. In 2007, Alstom, among others, was fined by the European Commission for participating in anticompetitive conduct between 15 April 1988 and 11 May 2004. In 2010, TenneT filed a case against Alstom claiming damages because it had allegedly overpaid for the GIS due to Alstom’s participation in the infringement.
Alstom unsuccessfully lodged a motion of lack of jurisdiction to the Court. According to the Court, the damaging act and the harm occurred in the same location, the municipality of Arnhem in the Netherlands. The damaging fact occurred in Arnhem because the purchase agreement was signed in Arnhem. The damage was suffered in Arnhem as well because TenneT is domiciled in Arnhem. For these reasons the Court assumed jurisdiction on the basis of article 5(3) of the EEX Regulation. This judgment is currently under appeal.
That the courts in the Netherlands are well equipped to deal with difficult issues of economic law also follows from the TenneT/ABB case (Case No. ECLI:NL:GHARL:2014:6766). In this case the Court of Appeal of Arnhem-Leeuwarden accepted the passing-on defence (the possibility that the claimant has passed on all or part of the overcharge (the increment in the purchase price due to anticompetitive behaviour) to the next level in the supply chain) and elaborated on the manner in which the passing-on defence should be construed. Under Dutch law it was unclear how the passing-on defence could be implemented before this judgment. In legal literature two methods of implementation were proposed.
The first method entailed that the damage that was passed on could be taken into account when assessing the quantum of damage. This means that any part of the overcharge that is passed on to a third party by the claimant does not qualify as damage for the claimant. The second method is to first establish the overcharge and fully qualify that overcharge as damage and subsequently establish the level of pass-on. If the defendant could prove that both the damage and pass-on originate from the same fact, and could also convince the court that it was reasonable that the passed-on damage should be detracted from the damages, the court would allow the passing-on defence. The Court of Appeal ruled that the first method is in line with Dutch civil law. The Court of Appeal stated that in principle the damage should be assessed at the moment in time that it was suffered. However, events that took place after the alleged damage was suffered could also be taken into account. The Court of Appeal argued that according to European law, every person that suffered damage should be able to claim compensation. This also applies to the purchasers (energy companies) to which TenneT has passed on the alleged damage. TenneT may therefore not have suffered damage insofar that the alleged damage was passed on to third parties. It is for these third parties to claim compensation for damages that were passed on to them.
The judgment of the Court of Appeal was appealed by TenneT to the Supreme Court. At the time of writing, in June 2016, the judgment of the Supreme Court is expected to hand down a ruling on this important topic at the end of the month.
The private antitrust litigation landscape in the Netherlands continues to be lively. Substantial litigation continues to take place across the full spectrum of competition law topics, with follow-on litigation taking the spotlight in terms of ground-breaking case law.
The follow-on cases brought in the Netherlands thus far are resulting in a stream of (interim) judgments, providing additional clarity on the legal framework governing follow-on claims. The additional predictability resulting from this developing case law in terms of assessing opportunities and risks related to follow-on claims are factors that pave the way for additional follow-on claim procedures.
The popularity of the Netherlands as a litigation forum for follow-on claims is expected to continue under the harmonised regime provided by the EU Damages Directive, due to the inherent efficiency of the procedures and the track records of the courts.
The evidentiary threshold in stand-alone claims requires potential litigants to sufficiently prepare in terms of economic analysis and other factual support for their claims. Provided such ‘homework’ is properly undertaken, the Dutch courts have demonstrated to be effective fora for bringing antitrust claims.