Netherlands: Private Antitrust Litigation
The increasing trend for private antitrust litigation in the Netherlands continued throughout 2016 and 2017. It is expected that implementation of the EU Damages Directive (Directive 2014/104/EU) which entered into force on 10 February 2017 will further accelerate the growth of antitrust litigation in the Netherlands.
The Netherlands remains a popular jurisdiction for claimants, alongside the UK, Germany, France and Austria. It is clear that plaintiffs recognise the benefits of bringing claims before the Dutch civil courts. Compelling factors include 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. Furthermore, the Dutch courts have a track record of efficiently dealing with highly complex cases, such as the civil cases following the finding of competition law infringement in the air cargo sector (see below).
In addition, the Netherlands boasts interesting tools for plaintiffs, such as a statutory regime for collective actions, a system that is currently under review by the legislator and is expected to further enhance the possibility to claim damages for a collective of claimants in one go. Another tool is the Dutch Collective Settlements Act, which provides the possibility to declare a collective settlement binding upon a class of claimants (with the possibility to opt-out). This settlement mechanism is considered to have extraterritorial reach (at least in the EU) because the rules require that the settlement agreement is declared binding by the Court of Appeal of Amsterdam. This contribution addresses some of the recent key developments in private antitrust litigation.
Developments in collective damages action legislation
Under the current rules, (non-profit) foundations that represent the interests of a group of claimants can initiate cases pursuing a judgment declaring that the defendant is liable for the damage. However, currently no actual damages award can be requested. Therefore, claimants need to initiate separate proceedings to obtain an award for actual compensation after a declaratory judgment is obtained.
A legislative proposal that was submitted to Parliament on 16 November 2016 intends to change the statutory rules to enable claimants to immediately claim collective damages 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. Also the second set of rules, the Collective Settlements Act, will be streamlined to fit seamlessly to the collective action rules. For the moment, these tools are of a lesser interest to commercial claim organisations and claim funders due to the requirement that the claim is initiated by a non-profit organisation. Such commercial parties and claim funders are therefore expected to keep bundling claims in a profit-oriented foundation or company and to pursue acquired claims collectively under the general statutory rules.
Follow-on damages claims
Although the Dutch courts provide a claimant-friendly platform for private antitrust damages claims, claimants should not expect to be enabled to hit a home run without diligently providing evidence for their claims. In the elevator sector, East West Debt, which had brought a bundle of claims allegedly acquired from healthcare institutions before the District Court of Utrecht, found its claim dismissed (Case No. ECLI:NL:RBMNE:2016:4284). The claim was initiated following a decision by the European Commission that several manufacturers of elevators had infringed competition law (Case No. 38.823). The District Court dismissed the claim in a judgment of 20 July 2016 stating that East West Debt failed to provide evidence that the alleged claims were actually transferred to it and failed to prove that the healthcare institutions actually purchased products or services from the defendants. East West Debt lodged an appeal with the Court of Appeal of Arnhem-Leeuwarden. This appeal is currently pending.
Another example follows from the case brought by Cartel Damage Claims (CDC) concerning damage allegedly suffered by several candle and wax paper manufacturers following an infringement in the paraffin wax sector that was found by the European Commission in 2008 (Case No. 39.181). In that case the defendants had argued that if the candle and wax paper manufacturers had suffered any damage, such damage was passed on to their customers. In that context, the defendants asked the court to order CDC to disclose invoices, sales data, product data, audited financial accounts, management accounts and other data concerning the setting of prices by the candle and wax paper manufacturers. The District Court of The Hague allowed the disclosure request in a judgment of 21 September 2016 (Case No. ECLI:NL:RBDHA:2016:11305) considering that, inter alia, given the fact that the proof for providing the passing-on defence resides with the claimant, the principle of equality of arms prescribes that the claimant discloses the relevant information. Similarly, in the air cargo litigation, the District Court of Amsterdam ordered the plaintiff who bundled a large number of alleged claims, to bring evidence that these claims were validly transferred to it and to substantiate the alleged claim with evidence that services were acquired by the claimants in the relevant time period (Case No. C/13/562256).
These examples demonstrate, somewhat unsurprisingly, that claimants that pursue collective claims will have to adhere to the general evidentiary rules that apply to individual claims. The burden of proof is not elevated on grounds that gathering evidence for collective claims can be a cumbersome exercise as evidence needs to be collected for each individual claim.
Developments concerning the application of the passing-on defence
In a judgment of 8 July 2016 (Case No. ECLI:NL:HR:2016:1483), the Dutch Supreme Court ruled for the first time on the application of the passing-on defence under Dutch law. The case followed an appeal against a judgment of the Court of Appeal of Arnhem-Leeuwarden of 2 September 2014 (Case No. ECLI:NL:GHARL:2014:6766) in which the Court of Appeal ruled that the damage of the claimant needed to be assessed by making a comparison of the actual economic situation of the claimant and the economic situation in a scenario without wrongful act. That assessment should account for any overcharge (the increment in the purchase price caused by anticompetitive behaviour) that is passed-on to third parties and therefore no longer adversely impacts the economic situation of the claimant. The Supreme Court ruled - by reversing previous case-law - that, besides the method adjudicated by the Court of Appeals, it is also possible to apply the passing on defence by discounting from the damage any upside for the claimant that it would not have obtained without the infringement (such as the possibility to charge higher prices to customers by passing on costs), insofar a causal link with the infringement can reasonably be established. The District Court of Gelderland, however, dismissed the passing-on defence argued by the defendants in judgments of 10 June 2015 (Case No. ECLI:NL:RBGEL:2015:3713) and 29 March 2017 (Case No. ECLI:NL:RBGEL:2017:1724) and allowed two claims by the Dutch Electricity Grid Operator following a competition law infringement found by the European Commission on the gas-insulated switch gear market. In both cases, the defendants had argued that the grid operator had passed on any of the alleged damage in its grid tariffs. The District Court dismissed the passing-on defence considering that allowing the passing-on defence would be unreasonable, inter alia, because the customers of the grid operator may have passed-on the alleged damage to their customers (which the District Court deemed likely) in which case the consumer ended up paying for the alleged damage. The Court awarded damages of €14.1 million and €23.1 million to be increased with statutory interests and costs. Both cases are now pending before the Court of Appeal of Arnhem-Leeuwarden.
Issues concerning contribution to damages between defendants that are held jointly and severally liable
An interesting issue was presented to the District Court of The Hague in the aforementioned paraffin wax litigation (Case No. ECLI:NL:RBDHA:2016:11305). In that case, the claimant held the defendants jointly and severally liable for damages allegedly suffered from purchases of paraffin wax from the infringing parties, and also for similar purchases from (non-defendant) parties that had not participated in the competition law infringement (such claims are often referred to as ‘umbrella' claims). The issue that arose was that one of the defendants settled the claim for the proportion of its liability. The claimant subsequently informed the court that it decreased its claim with the amount of the liability of the settling defendant, without specifying an exact amount. Following this change of claim, the remaining defendants argued that the court now first has to determine the share in the liability, not only for the settling defendant, but also for all other liable parties. The District Court disagreed and ruled that it should - at this stage - only assess the share (the obligation to contribute to the alleged damage) of the settling defendant. This means that the District Court likely also needed to rule on the share of liability for the ‘umbrella' claim. Interestingly, the District Court further ruled that if it would become clear that the settling defendant paid a settlement amount that exceeded its required contribution to the damages, the claimant will have to decrease its claim with the actual amount paid by the settling defendant. This follows from the fact that applicable law assumes a purely compensatory nature. The claimant is therefore not allowed to claim more than the damage it allegedly suffered. The District Court therefore did not rule out that the claimant may have to disclose the settlement amount at a later stage. However, the District Court, in its judgment, did not determine the share in the liability of the settling party. How this share should be established remains therefore unclear.
This case is a clear example of the difficulty with establishing the amount of contribution to the damages that jointly and severally liable parties need to pay. Under Dutch law - like in most other EU jurisdictions - it remains unclear how to establish the quantum of such contribution. It has been argued that the proportion of sales to the claimant should he used as a benchmark. The Damages Directive seems to provide a slight indication that this is the preferred option (at least from an EU law perspective), as it provides in article 11(2) that a small or medium-sized enterprise should (conditionally) only be held liable to its own direct and indirect purchasers (a similar provision exists for leniency recipients (article 11(4) Damages Directive), thus providing an indication that one should look at the sales generated by each party. Others, however, have argued that the benchmark should be the market share that each party held at the time of the unlawful conduct, the profit that each party derived from the unlawful conduct or the level of culpability.
Stand-alone damages claims
It is not only follow-on claims that have found their way to the Dutch civil courts; this is also the case for a number of stand-alone actions (ie, claims concerning alleged violations of competition law that were not prosecuted by a competition authority), despite a relatively high evidentiary threshold set by the Supreme Court in the case IATA/ANVR (Case No. ECLI:NL:HR:2012:BX0345) in 2012. The Supreme Court required in that judgment that claimants provide sufficient substantiation of the alleged anticompetitive behaviour, in particular including economic facts, in order to make it possible to have a meaningful legal debate about the potential violation.
Most stand-alone actions concern 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, etc). In that regard, the possibility of obtaining a summary judgment for interim relief is a popular means to challenge such restrictions. Interim relief is an expedient way of obtaining a prohibition or annulment of restrictive covenants or reverse unlawful acts (such as an unlawful termination of an agreement) and is hence frequently sought.
Noteworthy stand-alone cases include the two judgments of the Court of Appeal of The Hague that reversed a lower court judgment holding that the supermarket chain Jumbo and the trade association for supermarkets, CBL, violated Dutch competition law rules. Another noteworthy stand-alone case was initiated by Warsteiner Benelux before the Court of Oost-Brabant in which Warsteiner Benelux sought to enforce a purchase obligation that was agreed with a pub owner.
The similar cases Jumbo/Hollandsche Exploitatiemaatschappij (Case No. ECLI:NL:GHDHA:2017:795) and CBL/Hollandsche Exploitatiemaatschappij (Case No. ECLI:NL:GHDHA:2017:794) concerned a rule set by trade association CBL regarding age control to prevent the sale of alcoholic beverages and tobacco products to minors. Hollandsche Exploitatiemaatschappij (HEM) had introduced a system called ‘Ageviewers' that provided remote assistance for determining the age of customers via cameras. The Ageviewers system therefore shifted the age check from the cashier to a remote control room. Subsequently, CBL - of which 95% of all supermarkets in the Netherlands are member - launched a campaign against the sale of alcoholic beverages and tobacco to minors. This campaign, to which all members committed, included the training of cashiers in age determination. The campaign was followed by a code of conduct for supermarkets (to which all CBL members also committed) that included specific minimum rules for the age check. These minimum rules included a procedure that cashiers have to follow to determine the age of customers. The minimum rules also included training for cashiers and an exam. Furthermore, CBL provided tools that assist cashiers with the age-check. The District Court of The Hague (Case No. ECLI:NL:RBDHA:2016:2480) ruled that the campaign and the code of conduct effectively prevent supermarkets from acquiring the Ageviewers system. The supermarkets and CBL had therefore collectively excluded the Ageviewers system from the market which, according to the District Court, constituted a violation of competition law rules. Hence, the code of conduct and compulsory training for cashiers were annulled and HEM was declared to be entitled to damages. The Court of Appeal, however, reversed this judgment. The Court of Appeal ruled that the campaign and the code of conduct did not have the ‘object' or ‘effect' to restrict competition. It ruled, following the judgment of the European Court of Justice of 11 September 2014 in the case Groupement des Cartes Bancaires (Case No. ECLI:EU:C:2014:2204), that the notion of ‘object to restrict competition' should be interpreted restrictively. The campaign and the code of conduct provide only minimum requirements for the age check and do not rule out that supermarkets implement additional systems. The fact that the campaign and the code of conduct required involvement of the cashier did not rule out that the Ageviewers system could coexist with the campaign and the code of conduct. Therefore, the Court of Appeal ruled that there was no ‘object' to restrict competition. In subsidiary order, HEM had argued that the campaign and code of conduct also had the ‘effect' of restricting competition. The Court of Appeal ruled that HEM had to prove that the campaign and the code of conduct had an appreciable impact on the relevant market. In that respect the actual context of the competitive conditions that would have prevailed absent the campaign and the code of conduct should be assessed. This required an assessment of the relevant market and the market position of the campaign and the code of conduct. HEM had, however, not sufficiently demonstrated that the fact that its Ageviewers system was not acquired by any of the CBL supermarkets was the result of the campaign and the code of conduct. Hence, also the ‘effect' of restricting competition was not demonstrated and consequently the judgment of the District Court was annulled.
The case Warsteiner Benelux (case No. ECLI:NLRBOBR:2017:597) concerned an obligation to exclusively purchase a yearly minimum quantum of Warsteiner beer for a period of 20 years. An importer of Warsteiner beer agreed on behalf of Warsteiner Benelux, with the pub Stadsbierhuys, to this purchase obligation in exchange for credit aid and the supply of a beer tender installation. Furthermore, it was agreed that the purchase obligation would be passed on to subsequent buyers of the pub. The pub was sold to Waag BV in 2015. The buyer, however, discontinued the pub. Subsequently, Warsteiner Benelux sued Waag BV and three private individuals, stating that the purchase obligation was still in force. The defendants argued inter alia that the purchase obligation violated competition law and was therefore invalid. Following a block exemption regulation of the European Commission, an exclusive purchase obligation that exceeds a period of five years would be in contravention to competition law rules, they argued. Warsteiner, however, argued that the competition law rules did not apply because the purchase obligation had no appreciable effect on the market as Warsteiner only held a negligible market share on the Dutch beer market and the agreement concerned a relatively low volume of beer. The District Court ruled that the European Competition law rules did not apply because the agreement had no effect on trade between the EU member States. Hence, the purchase obligation needed to be assessed under the Dutch Competition Act. In this regard the District Court ruled that a party that relies on the nullity sanction for acts or covenants that violate competition law must demonstrate that there was an appreciable impact on competition on the relevant market (following a judgment of the Supreme Court of 2012 (Case No. ECLI:NL:HR:2009:BG3582)). As the defendant did not furnish any facts or evidence, the District Court dismissed the defendants' argument and ruled that the purchase obligation was enforceable.
These cases show that competition law rules are often used both by claimants and defendants to challenge restrictive commercial arrangements. It remains, however, important to sufficiently substantiate arguments that rely on competition law rules. The common denominator in the cases set out above is that the invocation of competition law failed because the parties argued a violation without providing sufficient (economic) facts. The cases also demonstrate the sophistication of how the courts deal with matters of competition law.
The expectations that private antitrust litigation in the Netherlands would further increase have proven to be true. Furthermore, the recent ground-breaking judgments, such as the Supreme Court judgment on the passing-on defence, will pave the way for antitrust litigation to come. Also, regardless of the relative substantial evidentiary threshold for stand-alone cases, claimants continue to be able to successful bring stand-alone 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 due to the implementation of the Damages Directive in February 2017 and a possible shift of cases to continental Europe following Brexit.