Reforming Private Antitrust Enforcement in Europe: Between Harmonisation and Regulatory Competition [1 ed.] 9783428544257, 9783428144259

Citation preview

Schriften zum Wirtschaftsrecht Band 259

Reforming Private Antitrust Enforcement in Europe: Between Harmonisation and Regulatory Competition By

Julian Kammin

Duncker & Humblot · Berlin

JULIAN KAMMIN

Reforming Private Antitrust Enforcement in Europe: Between Harmonisation and Regulatory Competition

Schriften zum Wirtschaftsrecht Band 259

Reforming Private Antitrust Enforcement in Europe: Between Harmonisation and Regulatory Competition By

Julian Kammin

Duncker & Humblot · Berlin

The Faculty of Law of the Christian-Albrechts-University of Kiel accepted this work as thesis in the year 2013.

Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available in the Internet at http://dnb.d-nb.de.

All rights reserved

© 2014 Duncker & Humblot GmbH, Berlin

Typesetting: Konrad Triltsch GmbH, Ochsenfurt Printing: buchbücher.de gmbh, Birkach Printed in Germany ISSN 0582-026X ISBN 978-3-428-14425-9 (Print) ISBN 978-3-428-54425-7 (E-Book) ISBN 978-3-428-84425-8 (Print & E-Book) Printed on no aging resistant (non-acid) paper according to ISO 9706

Internet: http://www.duncker-humblot.de

Meinen Großeltern Gisela und Siegfried Martin

Acknowledgements This book is a slightly updated version of my PhD thesis which was submitted to the Law Faculty of the Christian-Albrechts-University of Kiel in August 2013. I wrote it during my time as a Research Assistant at the Chair of Public Law where I worked on the project “Reforming the European Civil Justice: The case of crossborder private antitrust law actions” which was funded by the European Commission. I am particularly indebted to my PhD supervisor and employer, Prof. Dr. Florian Becker, LL.M. (Cambridge), for his outstanding academic support. His door was always open to me and without his help and belief in me I would not have been able to write this book. I am also very grateful to the second examiner, Prof. Dr. Joachim Jickeli, for his constructive suggestions. I want to thank those who worked on the project with me, especially Dr. Mihail Danov, Garnett Traeger and Henning Gründahl. I also want to thank the whole Chair of Public Law for two unbelievable years, with special thanks to Nikola Sieverding and Frederik Heinz for their patience when sharing a room with me. My gratitude is also extended to Dr. Angus Campbell for his helpful comments on an earlier draft of this book. All remaining errors are mine. I also want to thank Dr. Tim Reher and Dr. Roland Wiring from CMS Hasche Sigle Hamburg for introducing me to antitrust law and Jon Lawrence and Boris Bronfentrinker from Freshfields Bruckhaus Deringer London for deepening my knowledge of this area. I thank my whole family, especially my parents, Ute and Jürgen Kammin, for their boundless love and belief in me and all my friends, especially Kathrin EngelbrechtGreve and Martin Mittelstädt, for giving me the necessary distraction when I needed it. I would like to extend a special thanks to my grandparents for their eternal support. Without their generous help this book would not have been possible. I dedicate it to them. In this book I have tried to state the law as it stood in January 2014. Berlin, April 2014

Julian Kammin

Table of Contents Part 1 The Situation

17

A. Antitrust Policy and Substantive Antitrust Law in Europe . . . . . . . . . . . . . . . . . . . . . . 17 I. Anti-Competitive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 II. Abusive Conduct by Monopolists and Dominant Firms . . . . . . . . . . . . . . . . . . . . . 19 B. Development of Antitrust Enforcement in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 C. Antitrust Enforcement through Damages Claims in Particular . . . . . . . . . . . . . . . . . . . 21 I. Current Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 II. Significance for Compensation and Deterrence . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 III. Application of Primary Law to Antitrust Damages Claims . . . . . . . . . . . . . . . . . . 23 IV. Transnational Dimension of Damages Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 1. International Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 D. Objective of this Thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Part 2 Aspects of Substance, Procedure and Jurisdiction

28

A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 B. Substantive Law in Cross-Border Antitrust Damages Actions . . . . . . . . . . . . . . . . . . . 29 I. National Provisions with Regard to Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 1. Burden of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 a) Follow-On and Stand-Alone Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 b) Significance of National Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 2. Requirement of Fault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 a) England and France: Strict Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 b) Disadvantages for Claimants through Requirement of Fault . . . . . . . . . . . . . 33 3. Award of Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 a) Restitution and Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 b) Assessment of Damages in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 c) Fines by a Public Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

10

Table of Contents d) Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 4. Passing-on Defence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 a) Consequences for Damages Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 b) Status Quo in the European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 5. Statutes of Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 6. Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 II. Choice-of-Law Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 1. Private International Law Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2. Contractual Claims in Antitrust Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 a) Contract/Contractual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 b) Applicable Substantive Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 3. Non-Contractual Claims in Antitrust Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 42 a) Applicable Substantive Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 b) Role of Art 6 (3) (b) Rome II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 c) Limit Forum Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 III. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

C. Procedural Law in Cross-Border Antitrust Damages Actions . . . . . . . . . . . . . . . . . . . . 45 I. Practitioners’ Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 II. Collective Redress Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 1. Role of Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 2. Principle of Equivalence and Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3. Different Mechanisms of Collective Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 a) Impracticality of Joint Actions and Test Cases . . . . . . . . . . . . . . . . . . . . . . . 50 b) Opt-In/Out Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 aa) Restrictive Framework in EU Member States . . . . . . . . . . . . . . . . . . . . . 51 bb) Benefits of Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 cc) Disadvantages of Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 c) Representative Actions by Associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 aa) Definition and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 bb) Examples from France, the United Kingdom and Germany . . . . . . . . . . 55 d) Assignment of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 aa) Model of “Cartel Damage Claims” (CDC) . . . . . . . . . . . . . . . . . . . . . . . 57 bb) Relationship to other Collective Redress Tools . . . . . . . . . . . . . . . . . . . . 58 e) Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 III. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 1. Practitioners’ Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 2. Cost Rules Among Member States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 3. Consequences for Antitrust Damages Claimants . . . . . . . . . . . . . . . . . . . . . . . . 62 IV. Standard of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 1. Cartels and Standard of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Table of Contents

11

2. National Rules on Standard of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 V. Access to Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 1. Information Asymmetry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 2. Different Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3. Practical Outcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 VI. Recognition and Enforcement of the Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 VII. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 D. Jurisdictional Rules in Cross-Border Antitrust Damages Actions . . . . . . . . . . . . . . . . 69 I. Claimants’ Uncertainty about the Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 II. Cultural Aspects Guiding Victims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 III. Position of Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Part 3 Ideas for Legal Reform

73

A. Approach of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 I. Different Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 II. Characteristics of Antitrust Litigation in the United States . . . . . . . . . . . . . . . . . . 75 1. Deterrence or Compensation? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 a) Passing-on Defence and Automatic Trebling . . . . . . . . . . . . . . . . . . . . . . . . . 75 b) Merging the Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 2. Access to Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 a) Exchange of Evidence between Parties in the United States . . . . . . . . . . . . . 76 b) Requirement of Related Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 3. Collective Redress Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 a) Opt-Out-Model of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 b) A Model for the European Union? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 III. Ideas for Reform Inspired by the US System of Antitrust Enforcement . . . . . . . . 79 B. “European” Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 I. Harmonisation/Centralisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 1. Current Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 2. Benefits of Uniform Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 3. Negative Aspects of Centralisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 a) Traditional Inconsistency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 b) Legal Inconsistency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 c) Harmonisation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 II. Decentralisation and Inter-Jurisdictional Regulatory Competition . . . . . . . . . . . . . 84

12

Table of Contents III. Fundamental Ideas for Legal Reform of the Brussels I Regulation . . . . . . . . . . . . 85 1. Promotion of Forum Shopping to Improve Private Enforcement . . . . . . . . . . . . 86 a) Forum Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 b) Regulatory Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 2. Negative Attitudes towards Forum Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 a) Unfairness to the Defendant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 b) Public Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 3. Limit to the Choice of Forums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 a) Choice-of-Law Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 b) Jurisdictional Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 c) Lis Pendens Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 4. Availability of Collective Redress and the Claimant’s Forum . . . . . . . . . . . . . . 92 5. Stimulating National Legislators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 IV. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Part 4 Analysis and Reform of the Jurisdictional Rules

95

A. Introduction/Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 B. Scope of the Brussels I Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 I. Unequal Access to Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 II. Antitrust Damages Claims and Non-EU Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 C. General Jurisdiction and Antitrust Damages Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 I. Actor Sequitur Forum Rei . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 II. Ratio of Protecting the Defendant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 1. Situation of Antitrust Victims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 2. Determination of a Well-Placed Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 III. Claimants’ Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 1. Analogy to Existing Venues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 2. Home Actions versus Forum Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 IV. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 D. Jurisdiction in Contract-Based EU Antitrust Damages Claims . . . . . . . . . . . . . . . . . . . 104 I. Possible Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 II. Matters Relating to a Contract/Forum Contractus . . . . . . . . . . . . . . . . . . . . . . . . . 104 1. Contribution to Private Antitrust Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . 105 2. Distinction between Contractual and Non-Contractual Matters . . . . . . . . . . . . . 106 a) Significance of the Distinction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 b) Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Table of Contents

13

c) Scope of Contractual Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 aa) Voidness of Contractual Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 bb) Damages Claims of a Contracting Party . . . . . . . . . . . . . . . . . . . . . . . . . 109 3. Place of Performance of the Obligation in Question . . . . . . . . . . . . . . . . . . . . . 110 a) Interpretation under the Brussels Convention . . . . . . . . . . . . . . . . . . . . . . . . 110 b) Interpretation de Lege Lata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 aa) Art 5 (1) (b) Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 bb) Benefits for Private Enforcement of Antitrust Law . . . . . . . . . . . . . . . . . 112 c) Consequences for Transnational Antitrust Actions . . . . . . . . . . . . . . . . . . . . 113 aa) Sale of Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 bb) Provision of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 cc) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 d) Reform Ideas for the Place of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . 116 4. Declaration of Voidness of Anti-Competitive Agreements . . . . . . . . . . . . . . . . 117 5. Damages Claim of a Contracting Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 a) Development towards Tortious Damages Claims . . . . . . . . . . . . . . . . . . . . . 118 b) Antitrust Damages Claim of a Contracting Party . . . . . . . . . . . . . . . . . . . . . 120 aa) Art 5 (3) Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 bb) Factual Connection of the Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 cc) Suggestions for Legal Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 6. Ideas for Reform of Art 5 (1) Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 III. Disputes Arising out of the Operations of a Branch or Agency . . . . . . . . . . . . . . . 123 IV. A Number of Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 1. Art 6 Brussels I and Forum Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 a) Benefits to Claimants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 b) Potential for Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 2. Close Connection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 3. Defendants Domiciled Outside the European Union . . . . . . . . . . . . . . . . . . . . . 128 4. Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 V. Matters Relating to a Contract Concluded by a Consumer . . . . . . . . . . . . . . . . . . 129 1. Ratio and Role of Consumer Protection in Antitrust-Based Litigation . . . . . . . 130 a) Application to Antitrust Damages Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 b) Betterment of Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 c) Protection of Defendants versus Effective Legal Protection . . . . . . . . . . . . . 131 2. Addressees of Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 a) Personal Scope: Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 b) Third Parties on Behalf of Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 aa) Consumer Associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 bb) Consequence for Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 3. Objective Scope of the Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

14

Table of Contents 4. Reform Proposals to Strengthen the Consumers’ Position . . . . . . . . . . . . . . . . . 136 a) Consumer Collective Redress Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . 136 aa) Home Venue for Consumer Associations . . . . . . . . . . . . . . . . . . . . . . . . 136 bb) Permanent Availability of Collective Redress Mechanisms . . . . . . . . . . 137 b) Tortious Damages Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 VI. Agreements on Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 1. Practical Implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 2. Benefits and Disadvantages of Choice of Court Clauses . . . . . . . . . . . . . . . . . . 139 3. Ideas for Legal Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims . . . . . . . . . . . . . . . . . . . . . . 140 I. Tort-Based Damages Claims and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 II. International Jurisdiction in Matters Relating to Tort/Forum Delicti . . . . . . . . . . . 141 1. Qualification, Scope, Ratio and Benefits for Antitrust Victims . . . . . . . . . . . . . 141 2. Place of the Harmful Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 a) Interpretation: Place of Damages and Place of Acting . . . . . . . . . . . . . . . . . 142 b) Consequences for Antitrust Damages Claimants . . . . . . . . . . . . . . . . . . . . . . 143 c) Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 3. Place of the Event Giving Rise to the Antitrust Damage/Place of Acting . . . . . 145 a) Infringement of Art 101 TFEU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 aa) Place of Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 bb) Place of Implementation or Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 cc) Place of the Seat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 dd) Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 b) Infringement of Art 102 TFEU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 4. Place where the Antitrust Damage Occurred/Place of Damages . . . . . . . . . . . . 148 a) Forum in Antitrust-Based Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 b) Unrestricted Freedom of Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 c) Indirect Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 5. Ideas for Legal Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 a) Benefits of Forum Delicti Commissi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 b) Avoiding Unlimited Forums and Abusive Forum Shopping . . . . . . . . . . . . . 151 F. New Venues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152

Part 5 Analysis and Ideas for Legal Reform of Lis Pendens and Related Actions

154

A. Ratio and Scope of Arts 27 and 28 Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

Table of Contents

15

B. Avoiding Parallel Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 I. Response of the Brussels I Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 II. Applicability in Antitrust Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 1. Art 27 Brussels I and Antitrust Damages Claims . . . . . . . . . . . . . . . . . . . . . . . . 156 2. Art 28 Brussels I and Antitrust Damages Claims . . . . . . . . . . . . . . . . . . . . . . . . 157 C. Defendants’ Tactics: Reverse Forum Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 I. Staying proceedings – Forum Non Conveniens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 1. Applicability of Forum Non Conveniens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 2. Position of Courts as Justification for Forum Non Conveniens? . . . . . . . . . . . . 159 II. Negative Declaratory Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 1. Theoretical Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 2. Practical Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 3. Suggestions for Legal Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

Part 6 Summary, Conclusion, Policy

165

A. Suggestions for Legal Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 I. Fundamental Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 II. Legal Reform of Art 2 Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 III. Legal Reform of Contract-Based Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 1. Reform Suggestions for Art 5 (1) Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 2. Reform Suggestions for Art 6 (1) Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 3. Reform Suggestions for Arts 15 et seq. Brussels I . . . . . . . . . . . . . . . . . . . . . . . 169 4. Reform Suggestions for Art 23 Brussels I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 IV. Legal Reform of Tort-Based Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 V. Legal Reform of Lis Pendens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 B. Legal Policy/Leniency Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 I. Significance of the Leniency Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 II. Dependence of Private Enforcement on Leniency . . . . . . . . . . . . . . . . . . . . . . . . . 172 III. Collision Points of Leniency and Cartel Damages Claims . . . . . . . . . . . . . . . . . . . 173 IV. Ideas for Legal Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 1. Civil Immunity for Leniency Applicants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 2. Waiving Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 3. Restricting Pre-Trial Disclosure and Access to Files . . . . . . . . . . . . . . . . . . . . . 176 4. The Way Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Subject Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

Part 1

The Situation A. Antitrust Policy and Substantive Antitrust Law in Europe Antitrust1 policy can be defined as “… the set of policies and laws which ensure that competition in the marketplace is not restricted in a way that is detrimental to society”.2 National and European legislation has been influenced by numerous objectives; the most significant is consumer welfare surplus, as well as the protection of small undertakings.3 Firms with market power are able to harm welfare by reducing output, raising higher prices, degrading the quality of products, suppressing innovation and depriving consumers and customers of choice.4 The goals of antitrust law are, briefly, to stop such abuses and thereby protect competitors, the dispersal of economic power and the redistribution of wealth.5 Legal rules establishing the unlawfulness of anti-competitive practices can be found in the Treaty on the Functioning of the European Union (TFEU) and in national Acts like the German Act against Restraints of Competition6. Arts 101 – 109 TFEU are meant to help the European Union “work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress …” as required by Art 3 (3) (2) of the Treaty on European Union (TEU). The Union-wide market integration7 shall be kept open by the antitrust rules.8 1 In this thesis, the notion “Antitrust Law” is used instead of “Competition Law” to describe the cartel prohibition, the merger control (which is not subject of this thesis) and the prohibition of abuse of a dominant position. This makes it easier to show the difference to “Unfair Practices” (German: Lauterkeitsrecht). 2 Motta, Competition Policy, p. 30. 3 Motta, Competition Policy, p. 18 et seq.; Whish, Competition Law, p. 1. 4 Whish, Competition Law, p. 1; Jickeli, in: Schliesky/Ernst/Schulz, Die Freiheit des Menschen in Kommune, Staat und Europa (2011), p. 713 (716, 727). 5 Whish, Competition Law, p. 19 et seq. 6 Gesetz gegen Wettbewerbsbeschränkungen (in the version of the 8th Amendment of 26 June 2013); Jickeli, in: Schliesky/Ernst/Schulz, Die Freiheit des Menschen in Kommune, Staat und Europa (2011), p. 713 states that the German Act against Restraints of Competition is considered to be the “constitution of the free market economy”. 7 See Arts 29, 45, 49, 56, 63 TFEU; see in general Jickeli, JZ (1995), p. 57.

18

Part 1: The Situation

I. Anti-Competitive Agreements There are different practices controlled by antitrust law. The most common ones are anti-competitive agreements which have as their object or effect the restriction of competition.9 They are targeted by Art 101 (1) TFEU which prohibits inter alia all agreements between undertakings and concerted practices which may affect trade between Member States and have as their object or effect the prevention, restriction, or distortion of competition within the internal market. They are automatically void, Art 101 (2) TFEU. Horizontal agreements between firms, often competitors who operate at the same market level10, are the most obvious target for European antitrust law and can be subdivided into two groups.11 First, cartels, referred to as “cancers on the open market economy”12, play the outstanding role in horizontal anti-competitive agreements. The most widespread way competition is distorted is a price-cartel between competitors fixing prices at the expense of third parties.13 Other ways to eliminate competition is for undertakings to agree to share particular markets between themselves geographically or according to classes of customers14 or to agree to restrict output, as purchase prices will rise in consequence15. The second area of horizontal agreements that is potentially targeted by Art 101 (1) TFEU is an oligopoly in markets, with merely few operators able to conduct themselves in a parallel manner.16 Art 101 (1) TFEU also applies to vertical agreements between firms on different market levels, usually between producers and retailers, but also possibly including wholesalers, sub-contractors, transport operators, and other undertakings.17

8

Streinz, Europarecht, para. 1011. Whish, Competition Law, p. 2. 10 Elhauge/Geradin, Global Competition Law and Economics, p. 73. 11 See the subdivisions in Whish, Competition Law, p. 496 and the following chapters. 12 Speech by Mario Monti of 11 September 2000, available at http://europa.eu/rapid/pressrelease_SPEECH-00-295_en.htm?locale=de (last accessed 14 February 2014). 13 Wiedemann, Handbuch des Kartellrechts, § 1 para. 1. 14 Whish, Competition Law, p. 513. 15 See for example Commission Decision of 6 August 1984 (IV/30.350 – zinc producer group), OJ (1984) L 220 p. 27 para. 67; Commission Decision of 23 July 1984 (IV/30.988 – Agreements and concerted practices in the flat-glass sector in the Benelux countries), OJ (1984) L 212 p. 13; Décision de la Commission du 18 décembre 1972 (IV-581-Cementregeling voor Nederland), JO (1972) L 303 p. 7. 16 Whish, Competition Law, p. 544 et seq. 17 See Whish, Competition Law, p. 604 et seq. 9

A. Antitrust Policy and Substantive Antitrust Law in Europe

19

II. Abusive Conduct by Monopolists and Dominant Firms The second pillar18 of practices which can be prosecuted by antitrust authorities is the abusive conduct of a monopolist or a dominant firm with substantial market power which enables it to behave like a monopolist.19 According to Art 102 TFEU, “… any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States”. Art 102 TFEU does not contain a provision comparable to Art 101 (2) TFEU. Still, it is undisputed that the voidness of the relevant act is the consequence.20 The cartel prohibition aims pre-emptively at the prevention of market control, while the prohibition of abuse of a dominant position takes this for granted and tries to constrain it. In a similar way to cartels, a dominant firm can exploit its position by charging excessive, supra-competitive prices.21 Another form of abuse with regard to pricing practices is predation. This occurs when a dominant firm sets prices at less than cost, at a level that implies the sacrifice of profits in the short-run in order to drive a competitor out of the market or to deter it from entering it, with the consequence that it can subsequently charge higher prices and get higher profits in the long-run.22 There are number of instruments other than price that a dominant firm might use to force the exit of smaller rivals: the most obvious concern is that a dominant firm might use exclusive agreements to harm competitors.23 Another conduct which can infringe Art 102 TFEU is tying24, a practice where a product’s supplier obliges buyers also to buy a second product. This can take the forms of contractual25 or technical tying26.

18 See Jickeli, in: Schliesky/Ernst/Schulz, Die Freiheit des Menschen in Kommune, Staat und Europa (2011), p. 713 (716) who distinguishe the three pillars: cartel prohibition, merger control and prohibition of abuse of a dominant position. 19 Whish, Competition Law, p. 3. 20 Court of Justice of the European Union, Judgment of 30 January 1974, Belgische Radio en Televisie and société belge des auteurs, compositeurs et éditeurs v SV SABAM and NV Fonior, Case 127-73, ECR 1974 p. 51 para. 16. 21 Whish, Competition Law, p. 706 et seq. 22 Motta, Competition Policy, p. 412. 23 Motta, Competition Policy, p. 363. 24 Motta, Competition Policy, p. 460. 25 See Commission Decision of 22 December 1987 (IV/30.787 and 31.488 – Eurofix-Bauco v Hilti), OJ (1988) L 65 p. 19 para. 98. 26 Court of First Instance, Judgment of 17 September 2007, Microsoft Corp. v Commission of the European Communities, Case T-201/04, ECR 2007 p. II-3601 para 302.

20

Part 1: The Situation

B. Development of Antitrust Enforcement in General Antitrust rules can be enforced both by way of private and public enforcement. While public enforcement describes the application of the relevant rules by competition authorities, private enforcement consists of their application in civil litigation between private parties.27 The latter can take, on the one hand, the forms of claims for injunction, supply or admission to a distribution system, or, on the other hand, financial damages claims.28 Europe predominantly prosecutes anti-competitive conduct through public rather than through private enforcement.29 The European Commission is at the centre of European antitrust policy as it is responsible for fact-finding, taking action against infringements of the law, imposing penalties, conducting sector inquiries and for developing policy and legislative initiatives.30 However, as the European Commission and national authorities look for ways to address a growing enforcement workload, private antitrust litigation is meant to take a more prominent role.31 Competition authorities have limited resources32 and are thus unable to investigate every alleged infringement of antitrust rules.33 Such efforts to develop and strengthen the possibility for private parties to enforce antitrust rules can be observed for over twenty-five years,34 which is demonstrated by the Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC35. In 2001, Commissioner Monti emphasised the need for a strengthening of private enforcement by saying that “… it is our aim that companies and individuals should increasingly feel encouraged to make use of private action before national courts in order to defend the subjective rights conferred on them by the EC competition rules”.36 The judgment of the Court of Justice of the European Union in Courage v Crehan was the landmark decision, emphatically establishing a right to damages under (old) Art 81 of the Treaty es27

Ashton/Vollrath, ZWeR (2006), p. 1. Böge/Ost, ECLR (2006), p. 197. 29 Russell, 28 BU Int’l LJ (2010), p. 141 (142). 30 Whish, Competition Law, p. 53. 31 Russell, 28 BU Int’l LJ (2010), p. 141 (142); see also Proposal for a Directive of the European Parliament and of the Council on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union of 11 June 2013, COM (2013) 404 final (Proposal for a Directive), p. 2. 32 Pheasant, 21 Antitrust (2006 – 2007), p. 59; Böge/Ost, ECLR (2006), p. 197. 33 Whish, Competition Law, p. 290; Böge/Ost, ECLR (2006), p. 197. 34 See Thirteenth Report on Competition Policy (1983), para. 217. 35 Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC of 27 April 2004, OJ (2004) C 101 p. 54. 36 Speech by Mario Monti of 1 and 2 June 2001, available at http://europa.eu/rapid/press ReleasesAction.do?reference=SPEECH/01/258&format=HTML&aged=0&language=EN& guiLanguage=en (last accessed 14 February 2014). 28

C. Antitrust Enforcement through Damages Claims in Particular

21

tablishing the European Community (TEC)37. The claimant was not a customer of a cartel seeking damages for harm inflicted by a horizontal agreement, but was rather himself party to a vertical agreement for the supply of beer.38 The subsequent judgment Manfredi was of equally outstanding significance. Here, the Court of Justice of the European Union repeated that the full effectiveness of Art 81 (1) TEC required that any individual can claim compensation for the harm caused by a prohibited agreement or practice.39 Further cornerstones of this development are the introduction of the Council Regulation No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty40 (Regulation 1/2003)41 and finally the publication of a Green Paper on Damages actions for the breach of the EC antitrust rules42 and a White Paper on Damages actions for the breach of the EC antitrust rules43, the purpose of which was to identify the main obstacles to a more efficient system of damages claims44.

C. Antitrust Enforcement through Damages Claims in Particular I. Current Situation Despite this development, the situation of damages claims in cases of antitrust infringements is one of underdevelopment. In 2004 there were only sixty or so cases in Europe leading to a judgment on damages, twenty-eight of which had actually led to an award of damages.45 And even since 2004 there have only been a few cases, 37 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 paras 26 et seq. 38 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 paras. 3 et seq. 39 Court of Justice of the European Union, Judgment of 13 July 2006, Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA (C-295/04), Antonio Cannito v Fondiaria Sai SpA (C-296/ 04) and Nicolò Tricarico (C-297/04) and Pasqualina Murgolo (C-298/04) v Assitalia SpA, joined Cases C-295/04 to C-298/04, ECR 2006 p. I-6619 paras. 60 et seq. 40 Council Regulation No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ (2003) L 1 p. 1. 41 Rodger, GCLR (2009), p. 92. 42 Green Paper on Damages actions for the breach of the EC antitrust rules of 19 December 2005, COM (2005) 672 final (Green Paper on Damages actions). 43 White Paper on Damages actions for the breach of the EC antitrust rules of 2 April 2008, COM (2008) 165 final (White Paper on Damages actions). 44 Rodger, GCLR (2009), p. 92 (93). 45 Study on the conditions of claims for damages in case of infringement of EC competition rules of 31 August 2004 (Study on the conditions of claims for damages in case of infringement

22

Part 1: The Situation

among them the judgment of the Regional Court46 Dortmund awarding damages of E 1.6 million following the European Commission’s decision in the “vitamin cartel”47. Despite an increase of the number of actions for damages in Germany from thirty-eight in 200448 to 120 in 200749, this situation is still far from being satisfactory. Successful claims have also been rare in the United Kingdom.50 The Competition Appeal Tribunal awarded damages to a victim of an abuse of a dominant position in 2012.51 As far as can be seen, this judgment is only the second antitrust follow-on damages claim to have reached the courts in the United Kingdom. At the same time, these figures to some extent misrepresent the number of damages actions which have been brought, since many cases settle.52 The reasons why antitrust litigation has still not reached a satisfactory level are manifold. Victims are afraid of the cartel’s retaliation or may prefer to cooperate with the infringers. Others abstain from litigation because they feel that the burden of proof or the financial risk of losing is too heavy.53

II. Significance for Compensation and Deterrence Without the possibility of compensation, antitrust rules would be weakened as “… actions for damages before the national courts can make a significant contribution to the maintenance of effective competition in the [European Union]”.54 Compared to other aspects of litigation like injunctions, claims for damages have the most significant practical relevance. There are numerous reasons why the greater use of private enforcement would be beneficial for victims and compliance. Deterrence and therefore compliance with the law would increase,55 in particular, a stronger private antitrust enforcement would boost businesses’ and consumers’ incentives to monitor the conduct of the undertakings they deal with, and increase of EC competition rules), available at http://ec.europa.eu/competition/antitrust/actionsdamages/ comparative_report_clean_en.pdf (last accessed 14 February 2014), p. 1; see also Pheasant, 21 Antitrust (2006 – 2007), p. 59 stating that “… actions are relatively rare”. 46 Landgericht. 47 Regional Court Dortmund, Judgment of 1 April 2004, 13 O 55/02 Kart; see also Bulst, EWS (2004), p. 403. 48 Böge/Ost, ECLR (2006), p. 197. 49 Weidenbach/Saller, BB (2008), p. 1020 (1021). 50 Whish, Competition Law, p. 305. 51 Competition Appeal Tribunal, 5 July 2012, 2 Travel Group v Cardiff City Transport Services. 52 Rodger, ECLR (2008), p. 96. 53 Basedow, in: Basedow, Private Enforcement of EC Competition Law, p. 1. 54 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 para. 27. 55 Hickey, 11 Trinity CL Rev (2008), p. 138 (140 et seq.).

C. Antitrust Enforcement through Damages Claims in Particular

23

their incentives to complain to a competition authority or take the matter to court if infringement occurs.56 Parallel to these litigation risks, the interest of those responsible for the governance of the business, like supervisory boards, can be raised. A result of these factors would be that firms are incentivised to comply with the law and greater compliance would maximise total welfare.57 However, the primary benefit of private enforcement is that more victims of cartels will be compensated, especially in the case of smaller infringements which are not spotted by the European Commission.58 The consumers’ interests in seeing the authorities imposing exorbitant fines is questionable as, after having suffered from infringement, the consumer might be harmed a second time if the company attempts to reallocate the cost of the fine to its customers.59 However, under the reasonable assumption of a detection rate of cartels of twenty per cent, if double damages with no prejudgment interest are available, the yearly damage recovery could reach over E 17 billion. If double damages plus prejudgment interest were introduced, economic actors suffering antitrust injury might recover up to E 21 billion yearly.60 In other words, if private antitrust damages actions do not become more effective in the years to come, foregone benefits for victims of antitrust infringements might range between E 5 and E 23 billion.61

III. Application of Primary Law to Antitrust Damages Claims From a victim’s point of view, the decisive question is how Arts 101 et seq. TFEU help them to achieve compensation in case they are harmed by antitrust violations. Each Member State has an antitrust law system, more or less modelled upon Arts 101 et seq. TFEU. Some of them even require that these provisions are interpreted consistently with EU rules.62 But either way EU primary law takes precedence over national law.63 Arts 101 and 102 TFEU are fundamental provisions for 56

Collins, 3 Competition L Int’l (2007), p. 53 (54). Collins, 3 Competition L Int’l (2007), p. 53 (54). 58 Hickey, 11 Trinity CL Rev (2008), p. 138 (140 et seq.). 59 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 80 (85) with further references. 60 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 11. 61 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 11. 62 See e. g. Section 60 of the UK Competition Act 1998. 63 Court of Justice of the European Union, Judgment of 15 July 1964, Flaminio Costa v E.N.E.L., Case 6-64, English special edition p. 585; Court of Justice of the European Union, Judgment of 22 October 1998, Ministero delle Finanze v IN.CO.GE.’90 Srl, Idelgard Srl, Iris’90 Srl, Camed Srl, Pomezia Progetti Appalti Srl (PPA), Edilcam Srl, A. Cecchini & C. Srl, EMO 57

24

Part 1: The Situation

the functioning of the internal market and have direct effect between individuals in all Member States.64 These provisions thus apply automatically, according to their own applicability criteria and irrespective of the determination of the law applicable under private international law. Arts 5 et seq. Regulation 1/2003 giving competition authorities and national courts the power to apply Arts 101 et seq. TFEU consequently only have a declaratory meaning. Recital 8 Regulation 1/2003 states that to ensure effective enforcement it is necessary to oblige National Competition Authorities (NCA) and national courts to apply European law if applicable, whenever they apply national antitrust law. However, numerous relevant matters with regard to antitrust claims are not determined by EU primary law. “In the absence of harmonised rules on the practice of private antitrust litigation, the European Member States maintain a diversified set of domestic procedural and substantive rules governing such litigation.”65 The effect of contributory negligence, the extent of the respective liability of several cartel members as multiple debtors, the calculation of damages, the standard of proof, and the effects of payment or setoff are only some of the issue which are dealt with by national law.66

IV. Transnational Dimension of Damages Claims It is the concept of “trade between Member States”67 which triggers the possibility and the obligation68 of national courts seised with an antitrust damages claim to apply Arts 101 et seq. TFEU.69 Disputes raising antitrust law issues are becoming increasingly international. “Public and private actions pursued against anti-competitive practices often involve companies located in different countries, business practices of global reach, procedures in more than one State and evidentiary material spread across multiple jurisdictions”;70 thus in these cases at least two national legal orders

Srl, Emoda Srl, Sappesi Srl, Ing. Luigi Martini Srl, Giacomo Srl and Mafar Srl, joined Cases C10/97 to C-22/97, ECR 1998 p. I-6307 para. 21; the German Federal Constitutional Court (Bundesverfassungsgericht) prefers a primacy due to constitutional authorisation, see Federal Constitutional Court, Decision of 22 October 1986, BverfGE, 73, 339 (375) and Federal Constitutional Court, Decision of 8 April 1987, BverfGE, 75, 223 (242). 64 Weiß in: Calliess/Ruffert, EUV/AEUV, Art 101 AEUV para. 24; Jickeli, in: Schliesky/ Ernst/Schulz, Die Freiheit des Menschen in Kommune, Staat und Europa (2011), p. 713. 65 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159. 66 Basedow, in: Basedow, Private Enforcement of EC Competition Law, p. 229 (238). 67 See Arts 101 (1), 102 TFEU. 68 Art 3 (1) Regulation 1/2003. 69 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty of 27 April 2004, OJ (2004) C 101 p. 81. 70 Basedow/Francq/Idot, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 1 (1 et seq.).

C. Antitrust Enforcement through Damages Claims in Particular

25

are involved. Jurisdiction, procedural and substantive law are determined by private international law. 1. International Jurisdiction The international jurisdiction is the first issue which needs to be determined by every victim considering claiming damages for a violation of antitrust law.71 Art 220 of the Treaty establishing the European Economic Community (TEEC) obliged Member States to engage in negotiations with each other with a view to ensuring for the benefit of their nationals the simplification of the formalities governing the reciprocal recognition and execution of judicial decisions. This resulted in the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels Convention). Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters72 (Brussels I) replaced and modified the Brussels Convention.73 While the Brussels Convention, as a treaty of public international law, required the transformation into the domestic law of the Contracting States, the Brussels I Regulation is directly effective and binding in its entirety in all Member States.74 The jurisdictional rules of the Brussels I Regulation take precedence over national procedural law.75 Art 3 (2) Brussels I jointly with Annex 1 Brussels I prohibits the use of any national rule to determine jurisdiction. The consequence is that national jurisdictional rules cannot be applied to antitrust damages claims with a transnational element.76 In 2010, the European Commission published a proposal to revise the Brussels I Regulation.77 In 2012, the legislator adopted the Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recignition and enforcement of judgments in civil and commercial matters

71

See in general Schack, Internationales Zivilverfahrensrecht, § 8 para. 449. Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ (2001) L 12 p. 1. 73 Staudinger/Steinrötter, JA (2012), p. 241 (242); Schack, Internationales Zivilverfahrensrecht, § 8 para. 265. 74 Art 288 (2) TFEU. 75 Kropholler/von Hein, Europäisches Zivilprozessrecht, Einleitung EuGVO para. 40; Court of Justice of the European Union, Judgment of 15 July 1964, Flaminio Costa v E.N.E.L., Case 6-64, English special edition p. 585; see also Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 2 VO EG Nr. 44/2001 para. 5. 76 Court of Justice of the European Union, Judgment of 27 February 2002, Herbert Weber v Universal Ogden Services Ltd, Case C-37/00, ECR 2002 p. I-2013 para. 59; see also Schack, Internationales Zivilverfahrensrecht, § 8 para. 220. 77 Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) of 14 December 2010 COM (2010) 748 final (Proposal for Recast). 72

26

Part 1: The Situation

matters78 (Brussels I Recast) which will according to its Art 80 repeal the Brussels I Regulation. It will apply from 10 January 2015.79 The Proposal for Recast does not bring major changes, the Brussels I Recast even remains behind it.80 2. Applicable Law Any cross-border litigation will also raise the question of the applicable law determining the exact conditions to be satisfied for the success of the damages claim. This is determined by Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations81 (Rome I). The Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations82 (Rome II) is of even greater significance for the determination of the applicable law.

D. Objective of this Thesis As the number of private damages claims for transnational antitrust infringements is as yet quite low it is a paramount aim to encourage these actions and create incentives for victims to claim damages before national courts. This has been put forward by the European Commission83, commentators84, solicitors85, practitioners86, and by the Court of Justice of the European Union87. Indeed, the significance of damages litigation for deterrence and compensation is great.88 78 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recignition and enforcement of judgments in civil and commercial matters matters, OJ (2012) L 351 p. 1. 79 Art 81 Brussels I Recast. 80 Both the proposal for recast and the new Regulation will be analysed in due course. 81 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, OJ (2008) L 177 p. 6. 82 The Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations, OJ (2007) L 199 p. 40. 83 White Paper on Damages actions, p. 1 et seq.; Art 1 Proposal for a Directive, p. 30. 84 For example Beschorner/Hüschelrath, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 9 (10); Komninos, EC Private Antitrust Enforcement, p. 8 et seq. 85 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (159 et seq.). 86 Böge/Ost, ECLR (2006), p. 197. 87 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 paras. 26 et seq. 88 Vide supra Part 1 C.II.

D. Objective of this Thesis

27

Having outlined that national and private international rules play a significant role in this context, there will be an analysis of to what extent they actually influence litigation over damages claims arising from antitrust infringements. Particular attention will be made to the fact these problems are “… at the crossroads between two sectors characterised by different legal traditions, namely competition law and private international law”.89 Ideas for legal reform will be presented. It should be noted that the author has worked as a research assistant at the project “Reforming the European Civil Justice: The case of cross-border private antitrust law actions” which was funded by the European Commission. Within this project, he has interviewed a number of solicitors of international law firms in Germany and Brussels90 with outstanding expertise in the hope of shedding some light on the litigation process, how it functions, and whether and how it might be reformed. Taking into account that many cases settle, the opinions of practitioners are of great value. The answers and observations have been introduced into this work.91

89

Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (23). The other part of the team interviewed practitioners in London and Brussels. 91 The author has all conducted interviews on file. As most of the data have already been published within the project “Reforming the European Civil Justice: The case of cross-border private antitrust law actions”, they are cited as follows: Kammin/Becker, in: Danov/Becker/ Beaumont, Cross-Border EU Competition Law Actions, p. 61 or Danov/Becker, in: Danov/ Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81. 90

Part 2

Aspects of Substance, Procedure and Jurisdiction A. Introduction The application of national law in litigation over damages claims arising from infringements of EU antitrust law1 in cases with a transnational element raises two relevant questions: 1. Which court has jurisdiction and will thus apply its law of civil procedure? 2. Which is the applicable substantive law?2 Decisive questions are therefore whether domestic rules contain provisions beneficial to claimants and whether they are encouraged to use the possibility of claiming in a foreign jurisdiction through Forum Shopping. This notion describes the scenario of a claimant bringing his action in some alien forum which gives him benefits he would not receive if he sued in his home forum.3 It usually refers to litigants unfairly exploiting jurisdictional rules to affect the outcome of a lawsuit.4 However, in spite of this “pejorative connotation”5, Forum Shopping was6 and remains popular7. As jurisdiction under the Brussels I Regulation can be founded on different bases, a choice of forums is provided. Parties can agree on jurisdiction,8 the defendant can be sued in the courts of the Member States where he is domiciled9 and special jurisdictions are also available10. As a consequence of this variety of choices,

1

See Kersting, ZWeR (2008), p. 252 (255). Basedow, in: Basedow, Private Enforcement of EC Competition Law, p. 229 (230). 3 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 171; Fawcett, 35 N Ir Legal Q (1984), p. 142 (143). 4 Juenger, 63 Tul L Rev (1988 – 1989), p. 553. 5 Juenger, 63 Tul L Rev (1988 – 1989), p. 553. 6 Juenger, 63 Tul L Rev (1988 – 1989), p. 553. 7 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (67 et seq.). 8 Art 23 (1) Brussels I. 9 Art 2 (1) Brussels I. 10 See e. g. Arts 5 (1), 5 (3), 6 (1) Brussels I. 2

B. Substantive Law in Cross-Border Antitrust Damages Actions

29

in nine out of ten cases of infringement of EU antitrust law, parties to the dispute will have a choice of more than one court in which to bring the action.11 These observations suggest that the significance of substantive (B.), procedural (C.) and jurisdictional (D.) rules and how claimants can take advantage and avoid disadvantages by choosing between them should be highlighted. The selection of substantive and procedural set of rules which will be analysed is chosen in accordance with the interviews with solicitors active in the field of damages claims in cross-border antitrust cases. Their weighting of the significance of national rules provides a general guidance.

B. Substantive Law in Cross-Border Antitrust Damages Actions Once a court has established that it has jurisdiction to hear and determine a damages claim, it has to decide which law applies. Though the mere existence of the claim in EU antitrust law cases is based upon Arts 101 et seq. TFEU, most relevant details and legal requirements are determined by domestic law. Aspects which keep every claimant most occupied in antitrust litigation are those linked to damages and compensation, as every victim seeks to achieve compensation, while stopping cartel infringements, anti-competitive conduct and abuse of market dominance will usually be of less importance. Art 15 (a) and (b) Rome II makes it clear that the question whether the claimant is entitled to recover loss is to be decided according to applicable national law.12 Some provisions with relevance for damages claims will be compared (I.) and in a second step there will be an analysis as to whether choice-oflaw rules eliminate potential differences (II.).

I. National Provisions with Regard to Damages If national regimes set different conditions under which victims of antitrust infringements are awarded compensation, the applicable law can be decisive for the success of the claim. An analysis of some of the different set of rules will provide information about the significance of the forum. The focus will lie on the German, the English and the French system due to their significance within the Union. The cause of action for a damages claimant in Germany is Section 33 (3) of the German Act against Restraints of Competition13, in England the action for breach of statutory duty14 and in France Arts 1382 et seq. of the French Civil Code15. 11 12 13 14

Ashton/Vollrath, ZWeR (2006), p. 1 (4). Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 160. Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 46. Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 47

30

Part 2: Aspects of Substance, Procedure and Jurisdiction

1. Burden of Proof16 The first aspect a claimant needs to consider is whether he can and how he will prove the breach of Arts 101 et seq. TFEU. This is generally a complex task. To prove an abuse of a dominant position the claimant usually needs market information he does not have. Illicit conduct of a cartel is even more complex to prove. Evidence is normally not known to the claimant in detail as he does not have the necessary insights into internal affairs of the undertakings.17 This can bar victims from claiming their damage. a) Follow-On and Stand-Alone Litigation In follow-on cases the European Commission’s declaration of infringement is binding for a judge in litigation over follow-on damages claims.18 This facilitates proof of a breach of EU antitrust rules. Pursuant to Art 16 (1) and (2) Regulation 1/2003 judges must also avoid giving decisions which would conflict with a decision contemplated by the European Commission in proceedings it has initiated. These rules pursue the objective of Recital 22 Regulation 1/2003 to avoid conflicting decisions in order to ensure compliance with the principles of legal certainty and the uniform application of the Union competition rules. Judges in Germany may additionally be bound by a decision of the Federal Cartel Office19 or a foreign NCA20. In the United Kingdom, Section 47 A of the Competition Act 1998 that has been introduced by the Enterprise Act 2002 contains a provision that is comparable to Section 33 (4) of the German Act against Restraints of Competition.21 In the vast majority of cases, claimants bring follow-on actions to benefit from the competition authorities’ investigation and the consequent facilitation when proving the claim.22 In these cases the burden of proof is a less significant factor but still should not be underestimated. For example, with regard to the proof of the extent of an illicit price 15

Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 50. Art 22 Rome II underlines that the burden of proof must be regarded as a matter of substance for the purposes of the Rome II Regulation. 17 Kersting, ZWeR (2008), p. 252 (257). 18 See Art 16 (1) (1) Regulation 1/2003. 19 Bundeskartellamt. 20 Section 33 (4) of the German Act against Restraints of Competition; Art 9 Proposal for a Directive, p. 36 plans to have such a rule Union-wide: “Member States shall ensure that, where national courts rule, in actions for damages under Article 101 or 102 of the Treaty or under national competition law, on agreements, decisions or practices which are already the subject of a final infringement decision by a national competition authority or by a review court, those courts cannot take decisions running counter to such finding of an infringement. This obligation is without prejudice to the rights and obligations under Article 267 of the Treaty”. 21 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 141. 22 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63), only one out of the eleven German respondents interviewed has experienced stand-alone cases in the field of hard-core cartels. 16

B. Substantive Law in Cross-Border Antitrust Damages Actions

31

adjustment, even leniency applications are fruitless as applicants do not have to give full particulars on this topic.23 This illustrates that the burden of proof can play a decisive role for antitrust victims even in follow-on scenarios. In stand-alone actions the claimant must prove an infringement of antitrust rules without benefiting from a prior decision to that effect by a competition authority.24 Therefore the burden of proof would be one of the most significant aspects for claimants. However, Art 2 Regulation 1/2003 states that: “In any national or Community proceedings for the application of Article 81 and 82 of the Treaty, the burden of proving an infringement of Article 81 (1) or of Article 82 shall rest on the party or the authority alleging the infringement. The undertaking or association of undertakings claiming the benefit of Article 81 (3) shall bear the burden of proving that the conditions of that paragraph are fulfilled.” Consequently, it seems that domestic law does not play a fundamental role as EU law sets the burden of proof. b) Significance of National Provisions Despite Art 2 Regulation 1/2003 there are some significant differences between national rules. German antitrust law contains interesting presumptions in litigation over antitrust-based damages claims which free parties from submitting evidence. For example, in abuse cases Section 18 (4) of the German Act against Restraints of Competition presumes that firms with a market share of forty per cent have a dominant position. The allegedly dominant undertakings have to prove that there is still competition in the relevant markets. In addition, Section 19 of the German Act against Restraints of Competition provides for further benefits for claimants with regard to evidence and proof. In this context, the study on the conditions of claims for damages in case of infringement of EC competition rules emphasises several other national specifics: French case law indicates that where a dispute involves questions with regard to the lawfulness of franchise contracts, the burden is on the defendant to prove the legality of the contract. In Portugal, should a party have rendered it impossible to prove a fact, the burden of proof is reversed.25 However, German courts may take those facts into account and may come to a reversal of the burden of proof.26 These examples demonstrate that despite Art 2 Regulation 1/2003 and an authority’s investigation, national rules on the burden of proof are of some relevance in litigation over antitrust damages claims and can give an incentive to bring an action to a certain forum to benefit from presumptions.

23

Bien, EuZW (2011), p. 889. Whish, Competition Law, p. 300. 25 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 54. 26 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 54. 24

32

Part 2: Aspects of Substance, Procedure and Jurisdiction

2. Requirement of Fault Normally, fault is a legal requirement for a damages action which needs to be proved by the claimant and therefore constitutes an obstacle to his action. Evidence that is capable of shedding some light on the question whether the defendant acted intentionally or negligently in an anti-competitive manner is usually not known to the claimant.27 This can bar victims from claiming damages. On the contrary, the lack of demand for fault increases the chance of success of the claim for damages as an infringement of antitrust rules is more likely. Member States take diverse approaches on the interaction between antitrust and general liability rules, in particular concerning the question of fault. It is possible to require fault, or only illegality, or that fault is refutably or irrefutably presumed where illegality is shown.28 Usually, fault is required in non-contractual damages actions.29 These different approaches indicate that – once again – the forum plays a significant role in litigation. a) England and France: Strict Liability One observation which stands out is that England does not require fault, but simply a breach of a directly effective provision of EU law.30 There are four categories of breach of statutory duty: breach of statutory duty simpliciter irrespective of carelessness (strict liability), careless performance of statutory duty in the absence of any other common law right of action, common law duty of care arising from the imposition of statutory duty and misfeasance in public office.31 In EU antitrust law strict liability applies.32 This suggests strongly that claimants might be inclined to bring their action before English courts in order to benefit from this aspect. Arts 1382 et seq. of the French Civil Code which apply to antitrust damages claims33 only require faute, dommage and lien de causalité while there is no requirement of fault. The notion faute covers objective and subjective elements. However, the requirement of fault ultimately depends on the preconditions of the

27

Kersting, ZWeR (2008), p. 252 (257). Waelbroeck/Slater, Eur Competition L Ann (2006), p. 425 (436 et seq.); Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 50. 29 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 50. 30 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 344. 31 House of Lords, 29 June 1995, X v Bedfordshire County Council, 2 AC (1995) p. 633 (730 et seq.) (Lord Browne-Wilkinson). 32 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 344. 33 Court of Appeal Paris, Judgment of 22 October 1997, not published but quoted in Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 50. 28

B. Substantive Law in Cross-Border Antitrust Damages Actions

33

respective provision. As Arts 101 et seq. TFEU do not require it, the infringers of antitrust law are liable regardless of fault.34 b) Disadvantages for Claimants through Requirement of Fault In jurisdictions like Germany, where fault is required, both intent and negligence are sufficient.35 In some Member States fault must be shown in relation to the violation of substantive law. The infringement per se is not enough but must have been committed negligently or intentionally.36 In other jurisdictions the breach of antitrust rules implies that fault exists or fault is technically a requirement, but it is refutably presumed where a violation of antitrust law is demonstrated.37 This shows that claimants have a strong interest in weighing the different national rules on the requirement of fault when thinking about the success of a certain claim. Taking action for damages before English or French courts is prima facie more promising than before German ones. 3. Award of Damage a) Restitution and Punitive Damages Obviously, the crucial aspect for every victim and potential claimant to consider is the amount of awarded damages; the higher the amount the more likely it is that a claim is brought. German law on damages is based on the principle of restitution in kind: Section 249 (1) of the German Civil Code. It provides compensation for the loss suffered (damnum emergens), which is usually the excess amount paid at conclusion of a contract with artificially high prices that have been manipulated by a cartel or a monopolist.38 Section 252 of the German Civil Code states that compensation also includes lost profit (lucrum cessans), for example of an intermediate customer.39 In the case of an increase in price due to a cartel that fixed prices, shared information or limited output, the intermediate customer is obliged to buy fewer

34

Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 51 and 347 with further references. 35 See by way of example Section 33 (3) of the German Act against Restraints of Competition; see Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 50. 36 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 50. 37 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 50. 38 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 399. 39 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 400.

34

Part 2: Aspects of Substance, Procedure and Jurisdiction

products than he would under a price if there was competition. The fewer products he purchases, the less profit he has. This lucrum cessans can be claimed.40 English law also aims at restitution in integrum.41 The court should award “… that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation”.42 This demonstrates that, comparable to the German legal situation, damnum emergens and lost profit are covered. There are nevertheless aspects which might attract Forum Shoppers. Despite the principle underlying all jurisdictions of restitution-based compensation,43 in some States there exists the possibility of awarding punitive damages under certain circumstances. They stand apart from compensatory damages and intend to punish and deter.44 Punitive damages are available under English law in limited circumstances,45 namely “… in cases of oppressive, arbitrary or unconstitutional acts by government servants; where the defendant’s conduct had been calculated by him to make a profit for himself which might well exceed the compensation payable to the plaintiff; where expressly authorised by statute”46. The UK Competition Appeal Tribunal recently awarded punitive damages in the case of an abuse of a dominant position.47 As far as is known, the judgment is the first to award punitive damages in antitrust-based litigation in England. If the requirements of oppressive, unconstitutional behaviour by public officers or calculated profit are met, punitive damages can also be awarded in cartel damages claims. This can be a very strong incentive for a claimant and result in exorbitant high damage awards which change the risk-reward-relation in private antitrust enforcement. This suggests that the availability of punitive damages can be a factor for antitrust victims in Europe to decide to bring a claim in a forum which allows for multiple damages. However, it should nevertheless be noted that the award of punitive damages is not very likely to happen.

40

Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 400. Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 427. 42 House of Lords, 13 February 1880, Livingstone v Rawyards Coal, 5 App. Cas. (1880), p. 25 (39) (Lord Blackburn). 43 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 47. 44 House of Lords, 7 June 2001, Kuddus v Chief Constable of Leicestershire Constabulary, 2 AC (2002), p. 122 (141) (Lord Nicholls). 45 See English High Court, Queen’s Bench Division (Commercial Court), 6 May 2003, Provimi v Aventis Animal Nutrition, 29 ECC (2003), p. 353 et seq. 46 House of Lords, 21 January 1964, Rookes v Barnard, AC (1964) p. 1129 (1131). 47 See Competition Appeal Tribunal, 5 July 2012, 2 Travel Group v Cardiff City Transport Services. 41

B. Substantive Law in Cross-Border Antitrust Damages Actions

35

b) Assessment of Damages in Germany When assessing the damage the harm suffered by the victim is relevant, whereas consideration of the infringer’s benefits in this context is basically foreign to German civil law. Courts are nevertheless allowed to estimate the amount of damage according to Section 287 of the German Code of Civil Procedure.48 This is a significant facilitation for the judge49 which improves the chance of success of damages claims.50 However, in cases of anti-competitive pricing practices the assessment of a hypothetical purchase price (under the assumption of competition) is very complex in practice. Section 33 (3) (3) of the German Act against Restraints of Competition therefore permits courts to take the infringer’s profit resulting from the anti-competitive conduct into account and thereby facilitates the enforcement of damages claims. This is a clear incentive to claim in Germany51 and can potentially balance the non-availability of punitive damages. c) Fines by a Public Authority Given the majority of follow-on actions to benefit from the competition authorities’ investigation,52 fines usually have already been imposed before the damages claim is brought. As they have reached an exorbitant level in recent years,53 claimants have an interest that these fines are not taken into account by courts when assessing damages. This would result in a significantly lower damages award. However, in European jurisdictions it is not possible to take into account the fines when setting damages. It would be at odds with the compensatory nature of damages claims.54 d) Summary The availability of punitive damages is an incentive for claimants in favour of bringing their claim to English courts. However, the award of punitive damages is rather unlikely to be the case and there is a growing reluctant attitude against them.55 48

Zivilprozessordnung. Foerste, in: Musielak, ZPO, § 287 ZPO para. 6. 50 Foerste, in: Musielak, ZPO, § 287 ZPO para. 1. 51 See Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (69). 52 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63), only one out of the eleven German respondents has experienced stand-alone cases in the field of hard-core cartels; see also Mundt, in: Frankfurter Allgemeine Zeitung Nr 130 of 8 June 2013, p. 14. 53 Weidenbach/Saller, BB (2008), p. 1020 (1021). 54 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 85. 55 House of Lords, 7 June 2001, Kuddus v Chief Constable of Leicestershire Constabulary, 2 AC (2002), p. 122 (157) (Lord Scott). 49

36

Part 2: Aspects of Substance, Procedure and Jurisdiction

Rules on assessment of damages differ among EU jurisdictions and may lead to Forum Shopping. In addition, the interplay of the German Act against Restraints of Competition and the German Code of Civil Procedure creates interesting options for litigants in Germany. It follows that differences between national laws within the European Union with regard to the rules on the award of damages can be of some significance for claimants. This suggests that strategic behaviour through Forum Shopping plays a vital role. 4. Passing-on Defence The passing-on defence describes the objection that the claimant who purchases from a supplier engaged in anti-competitive conduct could minimise his economic loss by passing the excessive price adjustment on to its own customers.56 “The damages caused by anti-competitive behaviour could therefore be passed down the supply chain or even suffered in entirety by the ultimate purchaser, the final consumer.”57 Similarly, the standing of indirect purchasers to whom the overcharge may or may not have been passed on has to be considered.58 a) Consequences for Damages Litigation On the one hand, an indirect purchaser’s damages claim can only be launched in a Member State providing standing for indirect purchasers. However, these jurisdictions, on the other hand, will not be preferred by direct purchasers as the passingon defence will usually be allowed, with the consequence that direct purchasers are only awarded the damage they actually suffered. Taking into account the mutual influence of indirect purchasers’ standing and passing-on defence, the European Commission outlined different solutions.59 Allowing the passing-on defence and giving direct and indirect purchasers standing entails the risk that both are unsuccessful in claiming damages as indirect purchasers will be unable to prove to what extent damages are passed on.60 Excluding the passing-on defence, while only direct purchasers can sue the infringer, favours direct purchasers.61 However, this solution clearly contradicts the principle of compensation and complicates private antitrust enforcement. Another solution is that the passing-on defence is excluded and both purchasers can sue the cartel members who could be liable to pay damages to all

56

Green Paper on Damages actions, p. 7. Green Paper on Damages actions, p. 7. 58 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 234; Green Paper on Damages actions, p. 8. 59 See Green Paper on Damages actions, p. 8. 60 Green Paper on Damages actions, option 21. 61 Green Paper on Damages actions, option 22. 57

B. Substantive Law in Cross-Border Antitrust Damages Actions

37

parties.62 Such a solution would be an outstanding incentive for victims to take action and therefore promote private antitrust enforcement. b) Status Quo in the European Union In June 2011, the German Federal Court of Justice63 ruled64 that indirect purchasers shall be able to claim compensation from cartelists65 and clarified that the latter can in return use the passing-on defence66. Passing the financial loss does not exclude or diminish the damage but needs to be regarded within the adjustment of profit.67 According to the Federal Court of Justice, admitting the objection that the damage has been passed on is not contrary to the rationale of compensation. It is merely about avoiding a double recourse of the cartelist who can be sued by direct and indirect purchasers.68 In return, the burden of proof lies on the defendant69 who has to outline that the excessive purchase price has been passed on and that there were no circumstances equalising the passing-on like a declining demand situation. Due to the fact that this regularly takes place on market steps which are not known to the cartelist, exemptions can be made if the defendant does not have the possibility of proving the passing-on.70 One aspect the court overlooked is that the double as well as the non-recourse of a cartelist is not already excluded by allowing the passing-on defence. Direct and indirect purchasers, or none of them, can be successful.71 However, allowing the passing-on objection will usually avoid this situation. This judgment is in line with German principle of restitution-based compensation.72 The passing-on defence ensures that direct purchasers can only claim damages they have suffered. By giving standing to indirect purchasers, the Federal Court of Justice took the necessary steps to strengthen the enforcement of private damages claims in antitrust cases and the possibility of compensation for the victims of cartels.73 62

Green Paper on Damages actions, option 23; Bergmann/Fiedler, BB (2012), p. 206 (207). Bundesgerichtshof. 64 This was necessary as even the 7th amendment to the German Act against Restraints of Competition did not bring any clear solutions, see Böge/Ost, ECLR (2006), p. 197 (199). 65 Federal Court of Justice, Judgment of 28 June 2011, BGHZ 190, 145 (151 para. 23). 66 Federal Court of Justice, Judgment of 28 June 2011, BGHZ 190, 145 (162 para. 56). 67 Federal Court of Justice, Judgment of 28 June 2011, BGHZ 190, 145 (162 paras. 56 et seq.). 68 Federal Court of Justice, Judgment of 28 June 2011, BGHZ 190, 145 (164 et seq. paras. 61 et seq.). 69 Federal Court of Justice, Judgment of 28 June 2011, BGHZ 190, 145 (165 para. 64). 70 Federal Court of Justice, Judgment of 28 June 2011, BGHZ 190, 145 (170 para. 76). 71 Bergmann/Fiedler, BB (2012), p. 206 (207); see also Fiedler, Class Actions zur Durchsetzung des europäischen Kartellrechts, p. 33 et seq. 72 Sections 249 et seq. of the German Civil Code. 73 Bergmann/Fiedler, BB (2012), p. 206 (209). 63

38

Part 2: Aspects of Substance, Procedure and Jurisdiction

The judgment underlines the homogenous development in Europe towards the indirect purchasers’ standing and the passing-on defence in return.74 However, the fact that these mechanisms are not established in all Member States’ courts can still be relevant for claimants. Among European jurisdictions, the passing-on defence is admitted in Denmark, France, Italy, Austria, Sweden, Spain and Hungary.75 Further, there is a clear tendency to allow it in the Netherlands, Spain and the Czech Republic.76 In England, there has not been case law explicitly admitting the passing-on defence. However, it has been recognised by English courts in antitrust proceedings in which the cartelist was provided with information while disclosure that the overcharge has been passed-on.77 5. Statutes of Limitation Statute of limitation periods differ greatly in European jurisdictions. A claim for damages under Section 33 (3) of the German Act against Restraints of Competition is time barred after three years.78 Section 33 (5) of the German Act against Restraints of Competition states that the statute of limitations is suspended (Section 209 of the German Civil Code) if a competition authority initiates proceedings. In England, claims for breach of statutory duty are time barred after six years79 (after two years before the Competition Appeal Tribunal), in France after five years80. If the limitation period is too short or cannot be suspended, a claim might already be time barred when a decision by a competition authority is finally rendered. The consequence is that claimants would be deprived of their right to compensation. The duration of proceedings gains further significance when considering that statutes of limitation are also used by defendants. Delaying strategies are aimed at letting antitrust damages claims expire in order to deprive the victims of their right to compensation or force them to bring the action in a forum that is advantageous to the defendants. 6. Concluding Remarks Domestic rules on the requirement of fault, the burden of proof, statutes of limitation, the passing-on defence and the admissibility of punitive damages are 74

Bergmann/Fiedler, BB (2012), p. 206 (207). Bergmann/Fiedler, BB (2012), p. 206 (207) footnote 10 with further references. 76 Bergmann/Fiedler, BB (2012), p. 206 (207) footnote 10 with further references. 77 Bergmann/Fiedler, BB (2012), p. 206 (207) footnote 10 with further references. 78 See Section 195 of the German Civil Code. 79 See Section 2 of the English Limitation Act 1980: “An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.” 80 See Art 2224 of the French Civil Code: “Les actions personnelles ou mobilières se prescrivent par cinq ans à compter du jour où le titulaire d’un droit a connu ou aurait dû connaître les faits lui permettant de l’exercer.” 75

B. Substantive Law in Cross-Border Antitrust Damages Actions

39

differently designed among European Member States. Claimants in litigation over damages claims arising from cross-border antitrust infringements face a variety of different national rules on substance. They should therefore carefully consider which aspects are most promising to guarantee the success of the particular damages claim. This illustrates that Forum Shopping is a crucial factor for the victims’ benefit. However, this outcome would be different if choice-of-law rules equalised these elaborated differences between national substantive laws.

II. Choice-of-Law Rules 1. Private International Law Framework Having approved its jurisdiction, a court has to decide which law applies to the respective dispute. National courts are not per se allowed to apply their own substantive law. The application of national law and the related opportunity of benefiting from particular rules favouring the claimant depends on choice-of-law rules. These national conflict rules81 cover transnational cases and designate when the State’s own or a foreign State’s civil law has to be applied for certain purposes.82 Private international law presumes that not all scenarios can be covered by the lex fori if transnational elements are involved.83 As conflict rules are part of the respective national law, the coexistence of several choice-of-law rules is a possible consequence. Their simultaneous application might lead to uncertainty as to the applicable substantive law. For example, in antitrust-based litigation involving English and German elements, English choice-of-law rules might declare another substantive law applicable than the German rules. However, it seems that this problem is solved by a European system of conflict rules. There is a high degree of harmonisation of choice-of-law rules relating to contractual and non-contractual obligations in the European Union, as the Rome Regulations determine which national substantive rules apply to cross-border disputes.84 “The proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought.”85 It consequently seems that the claimant’s incentive to choose a certain forum decreases from the choice-of-law perspective.86 While this is certainly the purpose of such rules, their ability to solve the problems of differing internal laws is often 81 82 83 84 85 86

See Schack, Internationales Zivilverfahrensrecht, § 1 paras. 2 et seq. Säcker, in: MüKo BGB Volume 10, EGBGB Vorbemerkung para. 1. Sonnenberger, in: MüKo BGB Volume 10, Einleitung Internationales Privatrecht para. 1. Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 14. See Recital 6 Rome I and Recital 6 Rome II. Kropholler/von Hein, Europäisches Zivilprozessrecht, vor Art 2 EuGVO para. 1.

40

Part 2: Aspects of Substance, Procedure and Jurisdiction

limited.87 There are numerous reasons why these instruments are unable to secure uniformity irrespective of the forum.88 The most obvious is that a choice-of-law rule may be in favour of the lex fori or entail at least a partial application of it.89 It is also possible that different jurisdictions apply different choice-of-law rules or what is prima facie the same rule “… may be uncertain in its operation or susceptible of different interpretations in different jurisdictions”90. Additionally, a mandatory law of the forum may override foreign law.91 First, there will be an outline of whether antitrust damages claims are contractual or non-contractual and thereby which Rome Regulation applies. Second, there will be an analysis as to whether the respective Rome Regulation eliminates the established differences between national substantive laws. 2. Contractual Claims in Antitrust Litigation The Rome I Regulation applies, in situations involving a conflict of laws, to contractual obligations in civil and commercial matters.92 It is thus the question whether damages claims in antitrust cases are categorised as contractual or noncontractual. Antitrust law can be used as a defence to meet one party’s attempt to enforce a contract with the opposing party’s contention that the contract is void as consequence of EU antitrust law. Or it can be used as an offence when a claim against a contractual partner is based on a violation of antitrust provisions.93 a) Contract/Contractual The Rome I Regulation does not contain a definition of “contract”, but due to the variety of definitions within the EU jurisdictions94, it has an autonomous definition95. This is also consistent with the interpretation for the purpose of the Brussels I Regulation. Here, the Court of Justice of the European Union demands for the existence of a contract an obligation freely assumed to each other.96 As Recital 7 87

Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.37. Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.37. 89 Bell, Forum Shopping and Venue in Transnational Litigation, paras. 2.38 et seq. 90 Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.43. 91 Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.48. 92 Art 1 (1) Rome I. 93 Fallon/Francq, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 63. 94 von Hein, in: Rauscher, EuZPR/EuIPR, Art 1 Rom I-VO para. 5 with further references. 95 Dutta, IPRax (2009), p. 293 (296); von Hein, in: Rauscher, EuZPR/EuIPR, Art 1 Rom I-VO para. 5 with further references. 96 See for the Brussels Convention, Court of Justice of the European Union, Judgment of 17 June 1992, Jakob Handte & Co. GmbH v Traitements Mécano-chimiques des Surfaces SA, Case C-26/91, ECR 1992 p. I-3967 para. 15; Court of Justice of the European Union, Judgment of 27 88

B. Substantive Law in Cross-Border Antitrust Damages Actions

41

Rome I states that the provisions should be consistent with the Brussels I and Rome II Regulations, this result can be transferred to the situation of choice of laws. This demonstrates that contractual agreements like sales or franchise contracts in antitrust cases fall under the scope of the Rome I Regulation. A claimant’s desire might be a declaratory judgment that a contract or any term of a contract is void and illegal as being in conflict with EU antitrust law. The application of the Rome I Regulation is undisputed in these cases.97 It is a scenario of greater interest for antitrust litigation when a contracting party brings a damages claim after the contract has been invalidated due to Art 101 (2) TFEU. Pursuant to Art 12 (1) Rome I the law applicable to a contract by virtue of the Rome I Regulation shall govern in particular, within the limits conferred on the court by its procedural rules, the consequences of a total or partial breach of obligations, including the assessment of damages in so far as it is governed by rules of law and the consequences of nullity of the contract. This illustrates that claims which are a consequence of the nullity of a contractual provision are covered by the Rome I Regulation. Art 12 Rome I has to be considered as being lex specialis and posterior in relation to Art 10 Rome II.98 b) Applicable Substantive Law As the Rome I Regulation can play a role in transnational litigation on antitrust damages claims even if the contract has become invalid, the question is whether its choice-of-law rules cushion the substantive differences private parties face when bringing cross-border actions. The basic principle of Art 3 (1) Rome I is that the contract “… shall be governed by the law chosen by the parties”. This offers parties the opportunity of influencing the applicable substantive provisions and thus benefit from differences between national substantive laws. These differences have a strong practical meaning and should consequently be considered by claimants in cross-border antitrust disputes. Such a result is further supported by the fact that according to Art 9 Rome I the court may give effect to mandatory rules of its own system and thus apply the lex fori. However, it should be noted that parties will probably not weigh particular advantages of matters on substance when entering into a contract. They will not consider the advantages for a future damages claim. Still, opting for their own substantive law is a natural motivation and can bring certain benefits. Art 4 Rome I may be applied to find out which national law governs the contract in the absence of choice made by the parties. The latter provision declares that an important connecting factor for choice-of-law purposes is the habitual residence of October 1998, Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002, Case C-51/97, ECR 1998 p. I-6511 para. 17. 97 See Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 141. 98 Freitag, in: Rauscher, EuZPR/EuIPR, Art 12 Rom I-VO para. 5.

42

Part 2: Aspects of Substance, Procedure and Jurisdiction

the party. The connection of contract and country in question is another crucial factor which would indicate the applicable law in the absence of choice, Art 4 (3) and (4) Rome I.99 In the absence of choice the possibility of influencing national matters on substance is reduced. 3. Non-Contractual Claims in Antitrust Litigation There are numerous scenarios in antitrust-based damages litigation where the claim is non-contractual in nature. For example, claims by indirect purchasers directed against a producer who conspired with other producers to fix prices are non-contractual.100 This is so as the roots of the excessive price adjustment do not lie in the contract itself but in the ex-ante coordination of the pricing by the cartel.101 Therefore the Rome II Regulation applies, Art 1 (1) Rome II. a) Applicable Substantive Law The basic rule is lex loci damni, set out in Art 4 (1) Rome II.102 Unless otherwise provided for, the law applicable to a non-contractual obligation arising out of a tort shall be the law of the country where the damage occurs.103 Under Art 6 (3) (a) Rome II104, the “… law applicable to a non-contractual obligation arising out of a restriction of competition should be the law of the country where the market is, or is likely to be, affected” (the “effects doctrine”105). This has to be regarded as the place where the direct damage occurred for the purpose of private antitrust damages claims.106 Recital 21 Rome II explicitly states that Art 6 Rome II is not an exception to the general rule in Art 4 (1) Rome II but rather a clarification of it. Horizontal 99 100

(97). 101

Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 144. Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91

Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91 (97); it is further stated that it is more difficult to classify claims in the field of refusals to supply by dominant undertakings which do not end in damages claims. 102 Becker/Kammin, EuZW (2011), p. 503 (506); Junker, in: MüKo BGB Volume 10, Vorbemerkung zu Art 4 Verordnung (EG) Nr. 864/2007 para. 1. 103 See Art 4 (1) Rome II which further states that this is irrespective of the country of the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur. 104 Art 6 (1) and (2) Rome II is a conflict rule for unfair competition and not for the restriction of competition. This differentiation is unclear and therefore confusing and should be addressed by the legislator, see Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91 (128). 105 Unberath/Cziupka, in: Rauscher, EuZPR/EuIPR, Art 6 Rom II-VO para. 50; Basedow, NJW (1989), p. 627 (628 et seq.); Mankowski, RIW (2008), p. 177 (184). 106 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 162 with further references.

B. Substantive Law in Cross-Border Antitrust Damages Actions

43

anti-competitive agreements affect the market, on which the preconditions for competition are distorted. Consequently, the flow of goods and the domicile of the purchasers are relevant factors.107 The effects of vertical agreements have to be determined with regard to the position of third firms which are active on the same market as the cartel. If a manufacturer from China agrees with his distributor from France that the latter does not sell products in Germany, the German market is affected.108 Cases of antitrust infringements can also generate claims based on unjust enrichment, which are covered by Art 10 Rome II.109 If a cartel member compensates another cartel member who experienced decreased sales following a price increase after joining the cartel, the former can claim a reimbursement from the latter and base this claim on unjust enrichment. However, the provision has little practical significance as the result will be the same as in a case of Art 6 (3) Rome II.110 Whenever several markets of different States are affected, compensation for antitrust victims is dealt with by the respective applicable law of the market.111 A cartel that fixed prices for the English and German markets will therefore have to compensate German purchasers according to German law and English ones according to English law.112 In these cases Forum Shopping to benefit from substantive rules would not be considered as courts do not apply their domestic substantive rules but those of the jurisdiction where the market is affected. b) Role of Art 6 (3) (b) Rome II The application of Arts 4 and 6 Rome II results in disadvantages, namely the parcelling of the damage, and increased effort and costs which are required to compensate the total damage according to different domestic civil regimes.113 These shortcomings are partially balanced by allowing the claimant who seeks compensation to choose the exclusive application of the lex fori.114 Art 6 (3) (b) Rome II provides that in competition law cases where the market is affected in more than one 107 108 109

(99). 110

(99). 111

Wurmnest, EuZW (2012), p. 933 (937) with further references. Wurmnest, EuZW (2012), p. 933 (937). Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91 Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91

Mankowski, RIW (2008), p. 177 (188). See Wurmnest, EuZW (2012), p. 933 (938). 113 Roth, in: Baetge/von Hein/von Hinden, Richtige Ordnung (2008), p. 623 (644 et seq.) with further references; Mankowski, RIW (2008), p. 177 (188); Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 166 with further references; Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 43 et seq. 114 Roth, in: Baetge/von Hein/von Hinden, Richtige Ordnung (2008), p. 623 (640). 112

44

Part 2: Aspects of Substance, Procedure and Jurisdiction

country, the claimant would be able to choose to base his claim on the law of the court seised. The Rome II Regulation thereby benefits claimants and seems to consider that in cartel and abuse cases the defendant is usually more powerful than the claimant.115 Complex cases are also simplified as they can be judged on the merits according to one single law. Court proceedings are facilitated (“lex fori in foro proprio”), as to opt for the substantive law of the forum makes sure that judges only have to deal with their own substantive provisions.116 Notwithstanding these benefits, the fact that the lex fori can apply in EU antitrust law cases changes the situation with regard to Forum Shopping, as the forum can be decisive for the applicable law. The consequence is that differences between national substantive laws influence the chance of success of the claim depending on where the action is brought. In cases in which the market is affected in several countries, a private antitrust claimant should carefully select where to bring an EU antitrust law claim, mainly considering the law of the forum. Forum Shopping is facilitated through the possibility of opting for the lex fori. c) Limit Forum Shopping Art 6 (3) (b) Rome II limits this choice of forum in two respects to avoid Forum Shopping.117 The possibility of opting for the lex fori is limited to courts of the defendant’s domicile (“… the person seeking compensation for damage who sues in the court of the domicile of the defendant”). Notwithstanding this limitation, in Art 101 TFEU cases, where the claimant sues several members of an international cartel, there are multiple domiciles available with the consequence that the claimant can choose between several forums and will consequently take action in the forum which is most advantageous with regard to the applicable law. Such a requirement is therefore ineffectual to limit Forum Shopping. The second limitation established by Art 6 (3) (b) Rome II is that the market in the Forum State must be “… amongst those directly and substantially affected by the restriction of competition out of which the non-contractual obligation on which the claim is based arises”. Unfortunately, the Rome II Regulation does not concretise what is meant by “directly and substantially affected”, neither in Art 6 Rome II nor in the Recitals. It is undisputed that the anti-competitive conduct must be appreciable 115

Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 43 with further references. 116 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 48 with further references. 117 A negative attitude towards Forum Shopping can be traced for example at Fawcett, 35 N Ir Legal Q (1984), p. 142 (144 et seq.); Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 172 et seq.; Unberath/Cziupka, in: Rauscher, EuZPR/EuIPR, Art 6 Rom II-VO paras. 72 et seq.; Brkan, 28 World Competition (2005), p. 479 (487); Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 48, 49, 51, 53.

C. Procedural Law in Cross-Border Antitrust Damages Actions

45

and that the effect must reach a minimum level.118 In price-fixing cartel cases, a convincing way is to measure the amount of goods sold at inflated price on a given market. If they are sold in the United Kingdom and Germany, but ninety-five per cent are sold in Germany, only the German market is “directly and substantially” affected. However, it is not necessary that the focus lies on the market of the forum.119 This demonstrates that even the second limitation does not significantly limit the claimants’ possibility of choosing between different lex fori and thus cannot constrain Forum Shopping.

III. Conclusion120 National rules on substance vary among European Member States. Claimants in litigation over damages claims arising from cross-border antitrust infringements face a variety of different domestic rules on substance. This suggests that Forum Shopping is a decisive factor for victims to benefit from these differences between national substantive laws. The parties’ options in contractual matters to choose the law which shall apply to their dispute, and especially the possibility of basing non-contractual damages claims on the lex fori, enable Forum Shopping and make it feasible. Choiceof-law rules laid down in the Rome Regulations are not capable of eliminating the national differences. A uniformity of European substantive laws is not achieved.

C. Procedural Law in Cross-Border Antitrust Damages Actions There is no equivalent to the Rome Regulations for rules on procedure. Such lack of uniform choice-of-law rules indicates that the forum is of greater importance for procedural than for substantive rules, as national courts always apply their own rules of civil procedure. This is supported by Art 1 (3) Rome II which declares that the choice-of-law rules do not apply to evidence and procedure; consequently the lex fori applies.

I. Practitioners’ Approach The answers to some interview questions121 gave interesting insights on the solicitors’ views as to the significance of procedural rules for Forum Shopping in cross118

Scholz/Rixen, EuZW (2008), p. 327 (331); Roth, in: Baetge/von Hein/von Hinden, Richtige Ordnung (2008), p. 623 (645). 119 Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91 (125). 120 Vide supra Part 2 B. with references. 121 Vide supra Part 1 D.

46

Part 2: Aspects of Substance, Procedure and Jurisdiction

border antitrust litigation. The gathered data clearly demonstrate that the procedural differences available in different jurisdictions shape the strategies of claimants. It was even suggested that, with regard to Forum Shopping, procedural rules could dominate the amount of damages awarded.122 In particular, on seventeen of nineteen occasions in England and on all eleven occasions in Germany and Brussels, disclosure rules and access to evidence were mentioned as the procedural aspect which could influence a claimant’s decision where to bring an EU antitrust law action.123 It is a clear reason for all German solicitors to advise their clients to claim in the United Kingdom: “One of the main topics is how do you get access to evidence … The United Kingdom with its procedural rules is the more attractive system.”124 However, it was also stated that disclosure is very interesting in theory, but produces high costs.125 The speed of the procedure was mentioned as a decisive factor.126 The experience of national courts was considered by four participants, as there are still Member States with no tradition in the private enforcement of antitrust law. The fact that the “cement case” has been pending for eight years at the Regional Court Düsseldorf, which was overwhelmed by the complexity of the case, was mentioned as a deterrent example.127 Standard of proof was mentioned as a decisive factor as well in Germany128 and in England129. The statute of limitation was only emphasised in one case as “… very important because we have widely different statutes of limitation periods in different countries”.130 An overview of the solicitors’ submissions suggest that collective redress mechanisms, duration of litigation, costs, standard of proof, access to evidence, and the enforcement of the title are the most significant procedural aspects for claimants to consider. The differences between national regimes in these areas of procedure and 122 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (84). 123 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (84). 124 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (67). 125 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (67). 126 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (68). 127 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (68). 128 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (67). 129 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (84). 130 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (68).

C. Procedural Law in Cross-Border Antitrust Damages Actions

47

their significance for the chance of success of an antitrust damages claim will be highlighted.

II. Collective Redress Mechanisms The European Commission found out that that victims with relatively small damage are unlikely to bring individual actions against cartels and dominant firms, given the costs of litigation in relation to the potential award.131 This is the major concern for victims of anti-competitive conduct, especially for consumers and small businesses.132 1. Role of Consumers To understand the significance of collective actions, the role of consumers in antitrust cases has to be analysed. Markets which respond efficiently to consumer demands can help to deliver a competitive economy.133 In recent years, many competition authorities have stressed the fundamental significance of consumer welfare when applying antitrust law: “Consumer welfare is now well established as the standard the Commission applies when assessing mergers and infringements of the Treaty rules on cartels and monopolies. Our aim is simple: to protect competition in the market as a means of enhancing consumer welfare and ensuring an efficient allocation of resources.”134 Some of the data from the interviews was organised to help to identify which type of victim normally initiates antitrust actions: consumers are virtually not active135. Thus it was not surprising that, according to the overwhelming view, consumers fare badly under the current system of antitrust enforcement. This was submitted on seventeen out of twenty-two occasions in England and Brussels and on nine out of ten occasions in Germany.136 “Only on two occasions was the view expressed that consumers fare acceptably under the current system”.137 One respondent even stated that “… consumers are really the losers in the current system … Unfortunately, under 131 Commission Staff Working Paper accompanying the White Paper on Damages actions for breach of the EC antitrust rules of 2 April 2008, SEC (2008) 404 (Commission Staff Working Paper accompanying the White Paper), para. 24. 132 Similar Scholl, Kollektiver Rechtsschutz im Kartellrecht, p. 27. 133 Green Paper on Consumer Collective Redress of 27 November 2008, COM (2008) 794 final (Green Paper on Consumer Collective Redress), para. 1. 134 Speech by Neelie Kroes of 15 September 2005, available at http://europa.eu/rapid/pressrelease_SPEECH-05-512_en.htm (last accessed 14 February 2014). 135 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (62 and 77). 136 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (82). 137 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (82).

48

Part 2: Aspects of Substance, Procedure and Jurisdiction

the legal framework consumers are practically not able to bring any damage claims successfully.”138 Two interviewees put the following two reasons for the insignificant role of consumers and consumer organisations forward: “Firstly, the individual harm is too low to afford a lawyer and to enter into the risk of a lawsuit and secondly, many consumers do not have sufficient documentation.”139 These insights confirm the European Commission’s statement above, claiming that damage caused by anti-competitive conduct is often passed down the supply chain140 to consumers and small businesses that do not bring an action for damages. As a result, many of these victims currently remain uncompensated.141 Without the option to pursue collective actions, “… private litigation is often simply too risky, too expensive and offers too little in the way of rewards to induce a private claimant to bring a case alone”, particularly in antitrust law.142 The benefits of collective actions include deterrence and compensation, which is achieved by the reduction of costs and their potential to overcome “the rational apathy problem”143. By decreasing individual costs, it is easier to encourage victims to enforce their rights and achieve compensation for those claimants.144 2. Principle of Equivalence and Effectiveness Considering, on the one hand, that consumers who have been harmed are not playing an active part in EU antitrust enforcement at the moment and do not achieve compensation, and considering, on the other hand, that the establishment of collective action mechanisms is possibly one of the few effective solutions to compensate them, there could be a legal duty for Member States to create legal and structural conditions for collective redress mechanisms.145 According to the Court of Justice of the European Union, Member States enjoy freedom concerning the legal framework of antitrust damages claims “… provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of rights conferred by [Union] law (principle of effectiveness)”.146 138 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (77). 139 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (77). 140 See Green Paper on Damages actions, p. 7; Scholl, Kollektiver Rechtsschutz im Kartellrecht, p. 27. 141 White Paper on Damages actions, p. 4. 142 Russell, 28 BU Int’l LJ (2010), p. 141 (144). 143 Russell, 28 BU Int’l LJ (2010), p. 141 (145) with further references. 144 Russell, 28 BU Int’l LJ (2010), p. 141 (145). 145 Tzakas, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 161 (163). 146 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001

C. Procedural Law in Cross-Border Antitrust Damages Actions

49

The question is whether collective redress mechanisms are an element of an EU-based right to damages as declared by the Court of Justice of the European Union.147 This would be consistent with Art 4 (3) TEU, claiming that pursuant to the principle of cooperation Union and Member States shall assist each other in tasks deriving from the Treaties. Still, it is highly doubtful whether such interference with the Member States’ procedural autonomy is an appropriate solution.148 This is underlined by the fact the Court of Justice of the European Union has been very reluctant to scrutinise national rules on the competence of domestic courts.149 The respect towards the Member States’ autonomy requires denying collective redress being part of an EU-based right in antitrust damages. Still, existing national rules should be consistent with the above mentioned case-law demanding equivalence and effectiveness.150 3. Different Mechanisms of Collective Actions In view of the unacceptable situation of consumers, national mechanisms of collective redress will be analysed and their respective advantages and disadvantages for claimants, and especially consumers, will be brought out. As already elaborated in the context of substantive matters, distinct differences between national regimes would suggest that Forum Shopping gives access to benefits. The availability of collective actions enabling groups of victims to recover and achieve compensation varies among European Member States. This makes it difficult to give a common definition of the different procedural instruments.151 Every second Member State does not have any collective redress mechanisms in place. In the vast majority of these jurisdictions, some kind of group or representative action can be taken in the collective interests of group members, but just to seek an injunctive order to stop unlawful conduct or to strike out unlawful clauses in consumer contracts.152 p. I-6297 para. 29; see also Court of Justice of the European Union, Judgment of 13 July 2006, Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA (C-295/04), Antonio Cannito v Fondiaria Sai SpA (C-296/04) and Nicolò Tricarico (C-297/04) and Pasqualina Murgolo (C-298/04) v Assitalia SpA, joined Cases C-295/04 to C-298/04, ECR 2006 p. I-6619 para. 62. 147 Tzakas, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 161 (163); see also van Gerven, 37 CMLR (2000), p. 501 (526 et seq.). 148 Tzakas, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 161 (163). 149 Court of Justice of the European Union, Judgment of 13 July 2006, Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA (C-295/04), Antonio Cannito v Fondiaria Sai SpA (C-296/ 04) and Nicolò Tricarico (C-297/04) and Pasqualina Murgolo (C-298/04) v Assitalia SpA, joined Cases C-295/04 to C-298/04, ECR 2006 p. I-6619 paras. 70 et seq.; Tzakas, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 161 (164). 150 Tzakas, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 161 (164) with further references. 151 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (196). 152 Civic Consulting (Lead) and Oxford Economics, Evaluation of the effectiveness and efficiency of collective redress mechanisms in the European Union, Final Report Part I: Main Report of 26 August 2008, available at http://ec.europa.eu/consumers/redress_cons/final

50

Part 2: Aspects of Substance, Procedure and Jurisdiction

a) Impracticality of Joint Actions and Test Cases Joint actions can be found in almost all jurisdictions of the European Union.153 They consist of a set of claims brought by several claimants together against the same defendant. Alternatively they can be joined by the judge due to a legal link between them.154 These actions are not capable of solving the problems brought up by antitrust infringements as they require that individuals have already taken action against the violator.155 In this case most of the relevant problems of antitrust enforcement had already been faced by the individuals themselves. Another considerable downside of joint actions is that courts face complex mass litigation as all the claims must be treated separately and awards are made individually.156 A test case is a kind of two-party-litigation, though the interests of a whole group of individuals are involved. The court decides on a single case to provide a guideline for a multitude of similar cases.157 A disadvantage prohibiting taking test cases as a role model for antitrust scenarios is that settlements, which are an important aspect of antitrust-based litigation, cannot be encouraged by the judges. Test cases aim explicitly at a court decision.158 b) Opt-In/Out Class Actions A class action is a civil court procedure under which individuals or businesses may sue as representatives of a larger class of unidentified individuals who are merely described and who share common grievances with the representative.159 There is not even a need for class members to “… show individual loss at the liability stage”.160 Victims may either have to exclude themselves from the proceedings with the consequence that only those who opt out by the “judicially-stipulated cut-off date” 161 are not bound by the judgment or victims can be required to opt in to be bound162. Any reportevaluationstudypart1-final2008-11-26.pdf (last accessed 14 February 2014), Annex 8 p. 173; Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (415 et seq.). 153 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 44. 154 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (201 et seq.); see Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 43. 155 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (202). 156 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (202). 157 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (202). 158 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (203). 159 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (412); see also Hensler, 11 Duke J Comp & Int’l L (2001), p. 179 (182). 160 Pheasant, 21 Antitrust (2006 – 2007), p. 59 (61). 161 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (412). 162 See Scholl, Kollektiver Rechtsschutz im Kartellrecht, p. 46 et seq. with further references.

C. Procedural Law in Cross-Border Antitrust Damages Actions

51

damage resulting from the action will be awarded to the members of the class as a whole although each will be entitled to a part of the award.163 Such class actions in antitrust proceedings are not known in many EU jurisdictions. aa) Restrictive Framework in EU Member States Opt-out class action regimes are the exception across the twenty-eight EU Member States. Only Denmark, the Netherlands and Portugal have “some version” of an opt-out collective redress regime.164 The recent Danish regime from 2008 is an interesting opt-out model. Though opt-in is intended to be the primary approach to the formation of a class, opt-out may be used as a secondary alternative in closely defined circumstances. Claims must be “… such low-value that it cannot be expected that they would be pursued through individual actions”, and that the opt-in model is considered a method which is not appropriate to address the problems.165 It should be noted that the United Kingdom plans to introduce opt-out class actions.166 In 2003, Sweden introduced an opt-in regime allowing private, organisational and public class actions.167 A private class action may be initiated by any person or entity that is both a member of the class and has his own claim. In antitrust-based claims this action can only be initiated by those with a contractual relationship with the infringer.168 The other two types of action are organisational class actions by consumer organisations and public class actions.169 The United Kingdom also provides for an opt-in action, the Group Litigation Order. bb) Benefits of Class Actions Class actions have positive effects on litigation on claims for damages in terms of deterrence and compensation, as claims may also be brought when no individual

163

Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 43. 164 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (415). 165 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (423) with further references. 166 Department for Business Innovation & Skills, Private Actions in Competition Law: A Consultation on Options for Reform, 24 April 2012 (Department for Business Innovation & Skills, Private Actions in Competition Law: A Consultation on Options for Reform), available at http://www.bis.gov.uk/assets/biscore/consumer-issues/docs/p/12-742-private-actions-in-compe tition-law-consultation.pdf (last accessed 14 February 2014), p. 3 et seq. 167 Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35 (42) with further references. 168 See Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 45. 169 See Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35 (42 et seq.) with further references; see Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 45.

52

Part 2: Aspects of Substance, Procedure and Jurisdiction

claims would have been filed.170 Victims of anti-competitive conduct “… may be dissuaded from starting an individual action given the costs, delays and burdens involved in actions for damages in this field, compared to the value of their individual claim”.171 The collection of information is facilitated as class action lawyers are specialised on areas of the law such as European antitrust enforcement. Individual claimants will usually not have access to sources and information which allow them to notice antitrust infringements, especially in cartel cases when evidence of an agreement is not directly observable. Infringements are often secret, or the extent of the losses suffered due to this infringement is not known to claimants.172 This demonstrates that class actions strongly benefit consumers and small firms. Another reason why class actions are beneficial in antitrust damages cases is the shorter court procedure with the consequence that activity in courts decreases. Class actions “… lessen the burden on the courts and the economy by bundling cases that would otherwise require trying the cases separately”.173 As affected individuals or associations are entitled to bring an action on behalf of all persons or undertakings who suffered damage through the defendant’s violation, class actions do not result in complex mass litigation and “… the court must deal with no more than two parties”.174 Judges are consequently discharged of the necessity of handling a multiparty litigation and this finally provides consistency which is important for both efficiency and public confidence in the judiciary.175 From the claimants’ point of view it is most important that “… the pooling of interests significantly reduces the risk of litigation in terms of legal expenses”.176 Victims with small claims often do not have sufficient incentives to bring a suit to redress wrongs as costs of the suit are likely to exceed the damage.177 In a series of individual claims, each victim would have to be represented by his own lawyer which obviously means a significant increase of the costs for each victim.178 Antitrust “… class actions make it economically feasible for individuals with common claims of minimal individual value to aggregate those claims into one lawsuit”.179 Class

170

Russell, 28 BU Int’l LJ (2010), p. 141 (145). Commission Staff Working Paper accompanying the White Paper, para. 39. 172 See Commission Staff Working Paper accompanying the White Paper, para. 39. 173 Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35 (58). 174 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (210). 175 Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35 (58). 176 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (211 et seq.). 177 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (137); Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35 (58). 178 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (212). 179 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (139) with further references. 171

C. Procedural Law in Cross-Border Antitrust Damages Actions

53

actions thus balance the vast difference between large firms and small antitrust victims.180 In contrast to joint actions and test cases, class actions offer an incentive for the defendants to settle the claims. The more members the class includes, the more likely a settlement is. It follows that claimants can enjoy the advantages of a settlement and the difficulties in proving and calculating individual damages bear less weight.181 Moreover, by providing more information on breaches of antitrust law and thereby improving the detection rate182, class actions also deter antitrust violations183. The logic of deterrence rests on the idea that potential violators undertake a cost-benefit analysis before committing an infringement. If costs exceed benefits, they will “… refrain from illegal activity”184. In the United States the amount awarded in private litigation is significantly higher than the fines imposed following public enforcement. In addition, almost half the breaches of antitrust law were first detected by class attorneys185. cc) Disadvantages of Class Actions A clear disadvantage of class actions is that they create specific “… costs of locating class members, notifying them, evaluating their proofs of claim, and distributing payments may be so large relative to the size of the individual claim as to result in a claim of little practical compensatory value”.186 These costs are lower in opt-in than in opt-out actions as by declaring to opt-in, group members identify themselves. Class actions are also referred to as being the “creatures of attorneys’ entrepreneurial incentives”187 since their benefits accrue primarily to lawyers188, and transaction costs outweigh the benefits to the class and society in general189. Class action lawyers have conflicts of interest and asymmetric “litigation stakes”190 which

180 Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35 (58); Scholl, Kollektiver Rechtsschutz im Kartellrecht, p. 160 et seq. 181 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (212). 182 Russell, 28 BU Int’l LJ (2010), p. 141 (177). 183 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (139). 184 Russell, 28 BU Int’l LJ (2010), p. 141 (145). 185 Russell, 28 BU Int’l LJ (2010), p. 141 (147) with further references. 186 Russell, 28 BU Int’l LJ (2010), p. 141 (155). 187 Hensler, 11 Duke J Comp & Int’l L (2001), p. 179 (195). 188 Schack, Einführung in das US-amerikanische Zivilprozessrecht, p. 81. 189 Hensler, 11 Duke J Comp & Int’l L (2001), p. 179 (195 et seq.); see also Pheasant, 21 Antitrust (2006 – 2007), p. 59 (61) and Mundt, in: Frankfurter Allgemeine Zeitung Nr 130 of 8 June 2013, p. 14. 190 Coffee, 54 U Chi L Rev (1987), p. 877 (889 et seq.); Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (138); Russell, 28 BU Int’l LJ (2010), p. 141 (148 et seq.).

54

Part 2: Aspects of Substance, Procedure and Jurisdiction

could lead them to act for their own benefit191. The fact that class actions often settle because antitrust infringers fear a negative impact on their image is sometimes not beneficial to the class members as settlements may result in collusion between lawyers and defendants192, leading to a much lower compensation and consequently only deterrence193. However, apart from considerations to protect the victims, namely the class, there are also concerns that alleged members of a cartel are forced into settlements even though the claim is rather weak and not very promising. The firm could enter into settlement negotiations just to avoid negative publicity.194 Another concern with regard to the opt-out system is that it violates “… deeply held beliefs in the Member States that parties should be present in actions concerning them”.195 This can be seen by constitutional problems with opt-out actions.196 The German Constitution197 “… limits the possibility of an individual to be bound by a judgement given in a proceeding in which he did not take part or never had the possibility to intervene”.198 Art 2 (1) of the German Constitution gives people a general freedom of action, which protects every action and inaction, and thus freedom from state coercion.199 This includes the procedural guarantee not to be bound by legal actions to which the victim did not opt in. Even modern mechanisms of communication through the internet cannot guarantee that all who may be affected by an anti-competitive practice will be aware of a class proceeding.200 This would inevitably violate the right to a court hearing as set out in Art 103 (1) of the German Constitution. Opt-in mechanisms are more likely to satisfy the traditional legal principle that the outcome of a case is binding only inter partes. Therefore, introducing opt-out collective actions would require substantially more significant changes than any other form of collective redress mechanism in Germany.201 191

Gilles/Friedman, 155 U Pa L Rev (2006), p. 103 (104) with further references. Scholl, Kollektiver Rechtsschutz im Kartellrecht, p. 167. 193 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (138) with further references. 194 Pheasant, 21 Antitrust (2006 – 2007), p. 59 (61); see also Schack, Einführung in das USamerikanische Zivilprozessrecht, p. 81. 195 Russell, 28 BU Int’l LJ (2010), p. 141 (178). 196 Russell, 28 BU Int’l LJ (2010), p. 141 (178). 197 Grundgesetz. 198 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 272. 199 Di Fabio, in: Maunz/Dürig, Grundgesetz, Art 2 para. 12. 200 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 288. 201 Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 316; even other European jurisdictions would face such con192

C. Procedural Law in Cross-Border Antitrust Damages Actions

55

However, opt-in redress also faces critiques. In such a system, the group register is of outstanding significance. It requires accurate entry of claimants’ names onto the register to determine who will be bound by any judgment on the common or related issues of fact or law. This means that “… a heavy onus inevitably falls upon claimant lawyers to find, identify and particularize the claims of the various class members as early as possible in the action”.202 This entails aggressive advertising perhaps drawing detrimental comment from the competent court.203 There are also psychological issues that can deter antitrust victims from opting-in, as they may not feel engaged with the legal process.204 Even language difficulties or cultural differences can become a barrier. Alternatively, the reasons for not opting in may be entirely to do with the defendant.205 In particular, wholesale traders and distributors may not want to put the business connection with their producers at risk. c) Representative Actions by Associations aa) Definition and Benefits A representative action is a claim brought by a consumer or trade association on behalf of a group of identified individuals to whom awards are made.206 This tool has numerous aspects in common with the class action, in particular as opt-in or opt-out mechanisms can still be applied. Representative actions create almost all advantages class actions bring for antitrust damages actions. Compared to individual victims, representative bodies which take action on behalf of the victims are specialised on certain topics and have experience in litigation. In addition, they reduce risks and costs of litigation. In theory, they consequently also benefit consumers. bb) Examples from France, the United Kingdom and Germany There are just a few Member States providing for representative actions with regard to damages claims. The practical significance shall be highlighted by an analysis of the French, UK and German approaches. stitutional problems, see Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 272. 202 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (428 et seq.). 203 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (428 et seq.). 204 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (430). 205 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (430); see also Green Paper on Consumer Collective Redress, para. 55. 206 See for a try to define the representative action with Union-wide validity, Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 43; see Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (415 et seq.); see for example Section 34a of the German Act against Restraints of Competition.

56

Part 2: Aspects of Substance, Procedure and Jurisdiction

Art L421-1 of the French Consumer Code enables associations régulièrement déclarées which have the statutory object of protecting the interests of consumers and to exercise such rights in the interest of consumers. According to the action en répresentation conjointe of Art L422-1 of the French Consumer Code, representative associations can institute legal proceedings to obtain reparation on behalf of the consumers who have opted-in. For example, the French consumer organization UFC Que Choisir, instituted a follow-on representative action against mobile phone operators in respect of excessive phone charges for 12.500 consumers whose damages added up to E 800.000.207 This rather low amount of compensation stood against the considerable costs of case preparation of about E 500.000.208 In the United Kingdom, the consumer association Which? brought just one action209 during the five years of the representative action’s existence.210 And even for this action Which? only managed to gather 130 customers out of a class of hundreds of thousands.211 This illustrates that neither deterrence nor compensation has been achieved, and identifying and particularising each consumer’s claim at the initial stage was – as in the French example – “… undoubtedly resource-intensive and costly”212. Another shortcoming of this tool is that only consumers and not businesses can be represented, though both groups may have suffered significantly as a result of price-fixing213 or other anti-competitive conduct. In contrast, the German legislator grants a right to certain associations to deprive the violator of an unlawfully gained profit instead of claiming damages. The main objective is thus not compensation, but rather deterrence.214 Such a skimming-off action can be based on Section 34a of the German Act against Restraints of Competition. Accordingly, anyone who violates EU or national antitrust law intentionally and gains economic benefits can be deprived of this profit. Section 34a (1) of the German Act against Restraints of Competition states that the gains skimmed-off must be routed to the Federal budget of Germany with the practical implication that associations do not take the risk of losing in court, with the consequence that they have to pay the costs without having any advantages in return in the case of a successful 207 The total sum of damages was around E 1.2 billion, Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (440). 208 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (440 et seq.). 209 The famous example of price-fixed football shirts. 210 Competition Appeal Tribunal, 30 January 2009, The Consumers’ Association v JJB Sports Plc, WL (2009) 364157. 211 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (439) also stating that the cartel operated during 2000 and 2001 to uplift the price of replica shirts by £15 – 20 each, as a result of which JJB Sports plc was fined £ 18.6 million by the Office of Fair Trading. 212 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (440) with further references. 213 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (440). 214 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (206) states this with regard to Section 10 of the German Act against Unfair Practices (Gesetz gegen den unlauteren Wettbewerb).

C. Procedural Law in Cross-Border Antitrust Damages Actions

57

claim. The consequence is that this provision does not have any practical significance.215 d) Assignment of Claims aa) Model of “Cartel Damage Claims” (CDC) In some EU States it is possible to assign claims for damages.216 The idea is that one firm acquires damages claims of victims by way of purchase and assignment. It is only this firm that files the lawsuit against the cartel members. It then “returns a percentage of the winnings back to the purchasers”.217 The most famous consequence of this legal construction is the Brussels-based company CDC which acquired damages claims of twenty-nine construction companies by way of purchase and assignment and filed a E 130 million suit in Germany against six members of the “cement cartel”.218 The most important question in this court procedure was concerned with admissibility.219 In 2008, the Higher Regional Court Düsseldorf ruled the claim was admissible. Antitrust-based claims can be sold and assigned to third parties who enforce them, whereas standing is to be denied if a third party tries to enforce claims in the name of individual victims of an antitrust infringement without acquiring them legally and economically.220 The decision was confirmed by the Federal Court of Justice in 2009, allowing proceedings on the substance to advance.221 The interviews with the leading experts in the field of cross-border antitrust law gave an interesting impetus to the discussion on this model. Nine out of eleven German respondents submitted that claimants consider cooperation “… ranging from very low cooperation, for example to use the same economist … to have some synergies and maybe to share the cost of the joint economist, or really to bundle the claims legally by way of assignment like the Cartel Damages Claim model where they purchase the claims and then bring them together …”.222 According to the interviewees, joining forces creates synergies and reduces costs and the assignment 215 Emmerich, in: Immenga/Mestmäcker, Wettbewerbsrecht Volume 2 GWB, Section 34a GWB para. 4; Kersting, ZWeR (2008), p. 252 (254). 216 See e. g. Austria, Germany and the Netherlands. 217 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (161). 218 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (161); Kersting, ZWeR (2008), p. 252 (254). 219 Scholl, Kollektiver Rechtsschutz im Kartellrecht, p. 139 et seq. 220 Higher Regional Court Düsseldorf, Judgment of 14 May 2008, IV-U (Kart) 14/07, paras. 53 et seq.; see also Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (161). 221 Federal Court of Justice, Decision of 7 April 2009, KZR 42/08 p. 2. 222 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (66).

58

Part 2: Aspects of Substance, Procedure and Jurisdiction

model is identified as the most popular form of cooperation. The decisive argument to cede claims instead of enforcing them on one’s own is to facilitate litigation in general and the burden of proof in particular.223 However, on 17 December 2013 the Regional Court Düsseldorf dismissed the damages claim against the members of the “cement cartel”. The first instance court ruled that that the assignment of the claims was invalid due to Section 138 of the German Civil Code being detrimental to the defendants as CDC filed the suit knowing it would not be able to pay the defendants’ costs in case of losing. As the cement purchasers – the victims of the fixed prices – would have had a share in the profits after a successful claim but no risk in case of losing, the assignment was immoral.224 This shows that the model of CDC might not be an option for victims of anti-competitive conduct in Germany.225 bb) Relationship to other Collective Redress Tools The assignment of antitrust damages claims is already practiced in many EU Member States. As it can be based on general civil rules, it does not require the introduction of new procedural and substantive rules.226 The second main benefit of the assignment model is that it brings many of the advantages of collective redress mechanisms. It allows for a centralised and market-wide gathering of evidence for the quantification of damage and overcomes the obstacle that victims do not have the means to substantiate claims and bear costs involved in private antitrust enforcement.227 Moreover, the model avoids many of the problems and risks arsing in the context of bundling claims. Many victims, like wholesale traders and distributors, have continuing business relationships with the cartel members. “By selling their claims to an independent third party they do not directly confront the infringers and thus do not compromise their business relationships.”228 Additionally, in contrast with common 223 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (66). 224 Regional Court Düsseldorf, Judgment of 17 December 2013, 37 O 200/09 (Kart) U. 225 However, there is another outcome in a CDC damages litigation in Finland (hydrogen peroxide cartel). This underlines again the significance of the forum. 226 See CDC, Comments on the UK Government’s Proposals on Private Actions in Competition Law: A Consultation on Options for Reform published in April 2012 (CDC, Comments on the UK Government’s Proposals on Private Actions in Competition Law: A Consultation on Options for Reform), available at http://www.carteldamageclaims.com/CDC%20Comments_UK%20Proposals%20Private%20Actions%20in%20Competition%20Law_2012.pdf (last accessed 14 February 2014), p. 10. 227 See CDC, Comments on the UK Government’s Proposals on Private Actions in Competition Law: A Consultation on Options for Reform, p. 9. 228 See CDC, Comments on the UK Government’s Proposals on Private Actions in Competition Law: A Consultation on Options for Reform, p. 9.

C. Procedural Law in Cross-Border Antitrust Damages Actions

59

collective redress mechanisms like representative and class actions, the distribution of compensation awarded is not a problem. The analysis here suggests that within class actions, the opt-in approach is more similar to European legal traditions. As the assignment model can be compared to the opt-in approach, victims might feel more comfortable making use of it.229 Nevertheless, there are significant shortcomings which forbid taking the assignment model as an alternate for collective actions. On the one hand, the individuals suffering damages have to be identifiable, and to make the case manageable the number of individual claims must be small enough to allow assignment.230 On the other hand, “… the aggregated amount of individual claims has to be big enough to create a sufficient financial incentive”.231 Consequently, the assignment model is not feasible in cases of relatively small damages, namely in those cases envisaged by class actions. Additionally, it seems that the assignment-model will not be an option in Germany being contraty to the German Civil Code. e) Summary232 Allowing collective actions has the clear potential to improve the victims’ situation and boost the private antitrust enforcement. If consumers are faced with litigating by themselves, excessive costs make it uneconomic to take action. This is especially relevant with regard to court, lawyer and expert fees which will usually exceed the compensation that can be achieved. Class as well as representative actions bring exceptional benefits for the enforcement of antitrust law by solving many of the problems shown. The assignment-model substitutes for missing mechanisms in some Member States but does not improve the situation of consumers. Unfortunately, the implementation of promising mechanisms to bundle antitrust damages claims varies between Member States. The benefits depend on the possibility of claiming in a forum which has collective redress mechanisms in place or where the assignmentmodel is possible.

III. Costs Some of the most significant rules to consider with regard to the question whether and where to claim damages are those on costs, including court and expert fees as well as costs for solicitors and barristers. Victims of anti-competitive conduct “… may be dissuaded from starting an individual action given the costs, delays and 229 See CDC, Comments on the UK Government’s Proposals on Private Actions in Competition Law: A Consultation on Options for Reform, p. 9 et seq. 230 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (161). 231 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (161). 232 Vide supra Part 2 C.II.3. with references.

60

Part 2: Aspects of Substance, Procedure and Jurisdiction

burdens involved in actions for damages in this field, compared to the value of their individual claim”.233 The study on the conditions of claims for damages in case of infringement of EC competition rules aimed to find out what are the likely average costs in an action brought by a third party in respect of a hard-core violation of antitrust law. This question could not be answered as there is no “average hard core competition case”.234 However, the replies which were received during the study indicate that on the basis of a E 1 million claim, costs are estimated at E tens of thousands. In the United Kingdom this figure is even higher, going above E 100.000.235 1. Practitioners’ Approach All German interview participants stated that costs are an important issue to bear in mind when deciding where to bring a cross-border damages claim as the economical attractiveness of the action will usually depend on it.236 One respondent maintained that costs are primarily considered by claimants as defendants use delaying strategies. It is “… a very popular defendant strategy to slow down the whole process and hope that the other … side is running out of money … This really increases the willingness for a settlement”.237 On three out of eleven occasions in Germany, costs for economic experts were mentioned explicitly.238 On several occasions, the participants compared the costs of the United Kingdom and the German system, concluding that costs in London exceed those in Germany. This is a clear reason to advise their clients to avoid litigating before English courts.239 Also in England there are voices stating that litigation in English courts is too expensive: “Any civil lawyer will identify why our proceedings cost so much; lengthy crossexamination and oral argument and, above all else, disclosure of documents. The latter, which supports and amplifies cross-examination and the length of submissions, is both expensive and, in the vast majority of cases, yields meagre returns.”240 233

Commission Staff Working Paper accompanying the White Paper, para. 39. Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 96. 235 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 96. 236 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (70). 237 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (70). 238 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (70). 239 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (70). 240 Sir Laddie, A legal system we can’t afford – Litigation in England costs between three and ten times more than similar cases in Germany and the Netherlands, The Times of 22 May 234

C. Procedural Law in Cross-Border Antitrust Damages Actions

61

Costs were mentioned in numerous different contexts of the interviews which demonstrates that there are many factors influencing the costs of cross-border antitrust litigation. The claimants’ bias to bring an action in their Home State was reasoned with costs in mind241 and also in the context of settlements costs were mentioned as the main incentive242. Costs also play a role in cooperation scenarios between claimants. The prevailing view among the interviewees on the willingness to cooperate with other claimants is that this is driven by costs, by sharing an economist or having synergies, especially by using the assignment-model.243 2. Cost Rules Among Member States Having examined the significance of cost rules for antitrust damages litigation, the question is how these rules are designed in Europe and whether there are considerable differences paving the way for Forum Shopping. The general rule within EU jurisdictions is that court fees have to be paid up front and the losing party pays the winning party’s costs.244 However, exceptions to this rule can be observed. Section 92 of the German Code of Civil Procedure states that if the claimant partly wins the case, costs are proportionally allocated in respect to the degrees of success and loss. Some jurisdictions provide for the possibility of tying fees for lawyers to the success of the respective damages claim and the compensation achieved. Some procedural regimes set minimum fees lawyers must charge, some allow contingency fees having as their object that the payment to the claimant’s counsel is only due if proceedings are successful and calculated as a percentage.245 In Germany minimum tariffs are mandatory246 while such a requirement cannot be found in England. In antitrust cases minimum tariffs are of minor significance considering the high fees solicitors charge and the fact that antitrust disputes normally settle and matters are not taken to court. On the contrary, contingency fees are a proper way to split risks between claimant and lawyer.247 This benefit in combination 2007, no longer available online but quoted in Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 163. 241 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63 et seq.). 242 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (76). 243 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (66). 244 Brkan, 28 World Competition (2005), p. 479 (504); see for example Section 91 (1) of the German Code of Civil Procedure. 245 See Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 93. 246 See the German Federal Fees Schedule for Lawyers (Bundesgebührenordnung für Rechtsanwälte). 247 Rubinfeld/Scotchmer, 24 The Rand Journal of Economics (1993), p. 343 (343 et seq.).

62

Part 2: Aspects of Substance, Procedure and Jurisdiction

with the point that contingent fees are a way to overcome the obstacles of financing litigation suggests that their availability is a clear boost for private antitrust enforcement, especially in combination with collective redress mechanisms. German law does not allow contingency fees248 which can, together with the “loser-pays”rule, be considered a significant detriment of the forum Germany with regard to private antitrust enforcement. However, Section 89a of the German Act against Restraints of Competition is meant to give some relief in this respect by reducing courts and lawyer fees. Its requirements are nevertheless hard to meet. 3. Consequences for Antitrust Damages Claimants Despite the congruence of several cost rules with only minor differences among European jurisdictions, costs may vary strongly depending on the forum. In particular, costs for lawyers must be taken into account. This suggests that Forum Shopping can be employed to benefit from lower costs in certain jurisdictions. Additionally, a combination of all national (substantive and procedural) characteristics has an impact on the total costs of damages litigation. This can be exemplified by a calculation of the study: “Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios”249 : “Assume that the prospective costs for a plaintiff are the opportunity cost of time spent in litigation (OCt) or settlement (OCs), costs of access to courts (AC) and – depending on the fee allocation rule chosen – legal costs for litigation (LCt) and settlement (LCs). Expected rewards are the damages claimed (D), times the probability of winning at trial (w), and the expected settlement amount (S), times the probability to settle the claim before trial (1 – p). The plaintiff will then sue whenever p[wD – (OCt + LCt + AC)] + (1 – p)[S – (OCs + LCs)] > 0 where OCs < OCt; LCs < LCt; and S < D.”250 This demonstrates that the claimant‘s expected reward from filing suit has as its main components the reward from settlement and trial. A consequence is that multiple damages increase the incentive to sue, as it increases D. A reversal of the burden of proof in favour of the claimant increases the incentives to sue, alongside with w. All rules increasing the probability of victory for the claimant (w) or increase the prospective cost of the defendant, in turn, have the effect of increasing the probability that the case will settle (1 – p), and also the settlement amount (S). All 248 See Section 49b (2) of the German Federal Lawyers Act (Bundesrechtsanwaltsordnung); even the German Federal Constitutional Court declared the unconstitutionality of contingency fees, Federal Constitutional Court, Decision of 12 December 2006, BVerfGE 117, 163 (181). 249 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 175 et seq. 250 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 175.

C. Procedural Law in Cross-Border Antitrust Damages Actions

63

means of funding private litigation increase the probability that the claimant will sue as they would reduce or eliminate LCt and AC.251

IV. Standard of Proof252 The question whether evidence proves a fact is to be determined by the law of the country where the question arises.253 In the case of stand-alone litigation, the standard of proof is of great practical significance. 1. Cartels and Standard of Proof In particular with regard to complex cartels, the standard of proof can be a decisive issue for claimants. Over a period of time some firms may be more active than others that may even leave the cartel for a while to re-enter it. Others may “… attend meetings or communicate in other ways in order to be kept informed, without necessarily intending to fall in line with the agreed plan”.254 The fact that there may be few occasions on which all the cartelists meet or behave precisely in accordance with one another illustrates how difficult it is for third parties to understand the cartel’s structure and prove the prohibited conduct.255 Indeed, the Court of First Instance256 has confirmed the “overall agreement”257, a concept which says that undertakings bear responsibility for conduct even though they may not be involved in its operation on a day-to-day basis258, for such cases259. This construction facilitates proof of an infringement. Nevertheless, the standard of proof challenges claimants in antitrust-based litigation, especially with regard to proving the extent of an illegal price adjustment. In this context, the distinction between anti-competitive agreements having as their object, and those having as their 251 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 175 et seq. 252 Other than the burden of proof, the standard of proof is not mentioned in Art 22 Rome II. This indicates that standard of proof has to be regarded as evidence and procedure within the meaning of Art 1 (3) Rome II and not as a matter of substance. 253 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 158 et seq. 254 Whish, Competition Law, p. 99. 255 Whish, Competition Law, p. 99. 256 Now General Court. 257 Court of First Instance, Judgment of 24 October 1991, Rhône-Poulenc SAv Commission of the European Communities, Case T-1/89, ECR 1991 p. II-867 para. 104. 258 Whish, Competition Law, p. 100 et seq. 259 Court of First Instance, Judgment of 24 October 1991, Rhône-Poulenc SAv Commission of the European Communities, Case T-1/89, ECR 1991 p. II-867 para. 126.

64

Part 2: Aspects of Substance, Procedure and Jurisdiction

effect, the restriction of competition, plays a vital role, since in the first case it is not necessary to prove that anti-competitive effects follow. Horizontal agreements that have as their object the restriction of competition are usually those to fix prices, exchange price information, share markets, limit output or sales, and those for collective exclusive dealing. Vertical agreements are mainly those to fix minimum resale prices and to impose export bans.260 2. National Rules on Standard of Proof In the majority of European States exists no generally accepted definition of the standard of proof. Most national provisions refer to the fact that the judge must be convinced.261 In French proceedings, the claimant has to emporter la conviction du juge.262 Section 286 of the German Code of Civil Procedure gives the judge the discretion to assess the weight of certain evidence. The German Federal Court of Justice does not demand absolute certainty but a high degree of probability.263 In antitrust cases, English courts also require a “high degree of probability”264 as standard of proof, or the claimant must prove the antitrust infringement “on the balance of probabilities”265. This latter means that the breach of antitrust law must be more probable than the non-existence of it. Taking into account the wording of these standards, it seems that the requirement in England is not as high as under German law. Claimants only face insignificant differences with regard to the legal requirements for the standard of proof in the Member States’ legal orders. The significance of the differences between national laws is further cushioned by the fact that national rules must not harm the EU principle of effectiveness.266 The standard cannot be set so high that the exercise of rights conferred by EU law, namely damages claims following infringement of Arts 101 et seq. TFEU, is practically impossible.267 260

Whish, Competition Law, p. 118 et seq. Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 55. 262 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 160 with further references. 263 Federal Court of Justice, Judgment of 17 February 1970, BGHZ 53, 245 (256). 264 English High Court, Queen’s Bench Division (Commercial Court), Shearson Lehman Hutton v Watson, 16 March 1989, 3 CMLR (1989) p. 429 (443). 265 Queen’s Bench Division (Commercial Court), 10 April 2003, Arkin v Borchard Lines, EU LR (2003), p. 232 et seq. 266 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 159; see for the principle of effectiveness Becker, 44 CMLR (2007), p. 1035. 267 Court of Justice of the European Union, Judgment of 13 July 2006, Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA (C-295/04), Antonio Cannito v Fondiaria Sai SpA (C-296/ 04) and Nicolò Tricarico (C-297/04) and Pasqualina Murgolo (C-298/04) v Assitalia SpA, joined Cases C-295/04 to C-298/04, ECR 2006 p. I-6619 para. 62. 261

C. Procedural Law in Cross-Border Antitrust Damages Actions

65

V. Access to Evidence 1. Information Asymmetry Antitrust-based litigation is particularly fact-intensive.268 Claimants need data concerning the defendant’s market dominance, “… notes on price overcharges agreed secretly between cartel members, details on how and when they influenced price and other parameters of competition, or internal documents of the infringer showing his analysis of market conditions and developments”.269 Claimants have to compare the anti-competitive situation to a situation which would have existed in the absence of breach of antitrust law.270 Access to relevant evidence can be one of the most significant factors for victims.271 Indeed, an abuse of a dominant position is much easier to detect than a cartel. Therefore the claimant’s opportunity of getting access to evidence is much more important in Art 101 TFEU cases. This is particularly the case if there is no prior decision from a competition authority establishing infringement, as the success of the action depends on the possibility for the claimants to oblige the defendant or another party to disclose evidence of the alleged antitrust infringement.272 These documents are typically in the possession of those parties who are suspected of the violation. However, even in follow-on litigation, access to evidence can be of vital significance as antitrust damages actions often require an examination of complex economical coherences.273 For example, concerning the extent of an illicit price adjustment, even leniency submissions cannot help claimants as leniency applicants themselves do not have to give full particulars on this topic.274 2. Different Approaches Judges in all Member States of the European Union have the power to order the litigating and third parties to disclose documents, while parties to the dispute generally only have limited power to enforce the production of evidence from adverse or

268

Commission Staff Working Paper accompanying the White Paper, para. 87. Commission Staff Working Paper accompanying the White Paper, para. 89. 270 Commission Staff Working Paper accompanying the White Paper, para. 89. 271 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (67). 272 Commission Staff Working Paper, Annex to the Green Paper Damages actions for breach of the EC antitrust rules of 19 December 2005, SEC (2005) 1732 (Staff Working Paper, Annex to the Green Paper), para. 54. 273 Becker, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 37 (56). 274 Bien, EuZW (2011), p. 889. 269

66

Part 2: Aspects of Substance, Procedure and Jurisdiction

third parties.275 “They must therefore rely upon voluntary co-operation or seek intervention by the court.”276 An example for little extensive fact-finding is France.277 In the past, the power of a German judge to order disclosure of documents has been even more restrictive. However, the reform of the German Code of Civil Procedure brought interesting benefits for claimants. Section 142 of the German Code of Civil Procedure empowers the judge to oblige a party or third party if reasonable to reveal documents that are in their possession. The claimant needs to be able to specify the documents in question.278 In practice, the amended version of Section 142 of the German Code of Civil Procedure is regarded as a real improvement for private antitrust enforcement.279 Additionally, the existence of presumptions like Sections 18 et seq. of the German Act against Restraints of Competition supports claimants. In contrast, extensive powers of disclosure exist for parties under English as well as Irish procedures.280 Disclosure in common law systems is mainly conducted by the parties with only minimal supervision by the court.281 The absence of such procedures under the procedural laws of other Member States is often cited as a reason for the lack of private enforcement actions in those jurisdictions.282 Pursuant to Part 31.6 of the English Civil Procedure Rules, the standard disclosure requires a party to disclose the documents on which he relies and the documents which adversely affect his own or another case, or support another party’s case, and the documents which he is required to disclose by a relevant practice direction. Therefore Part 31.10 of the English Civil Procedure Rules states that each party must make and serve on every other party, a list of documents in the relevant practice form. Correspondence with a lawyer is not covered by disclosure rules.283 Another significant difference between these legal systems is that in some jurisdictions disclosure is available pre-trial which

275

Staff Working Paper, Annex to the Green Paper, para. 55. Staff Working Paper, Annex to the Green Paper, para. 55. 277 See Arts 138 et seq. of the French Code of Civil Procedure; see especially Art 138 of the French Code of Civil Procedure: “Si, dans le cours d’une instance, une partie entend faire état d’un acte authentique ou sous seing privé auquel elle n’a pas été partie ou d’une pièce détenue par un tiers, elle peut demander au juge saisi de l’affaire d’ordonner la délivrance d’une expédition ou la production de l’acte ou de la pièce.” 278 Stadler, in: Musielak, ZPO, § 142 ZPO para. 4. 279 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 146. 280 Woods, 16 Loy Consumer L Rev (2003 – 2004), p. 431 (442); Pheasant, 21 Antitrust (2006 – 2007), p. 59 (60). 281 See Part 31.6 of the English Civil Procedure Rules. 282 Woods, 16 Loy Consumer L Rev (2003 – 2004), p. 431 (442). 283 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 159. 276

C. Procedural Law in Cross-Border Antitrust Damages Actions

67

is foreign to the German system, for instance, as there is no such division into pre-trial and trial.284 3. Practical Outcome In the European Commission’s view, “… a more effective framework for the exercise of the right to compensation for antitrust damage therefore hinges on improved access for victims to evidence in the possession or under the control of the opponent or third persons”.285 It states that strict specification requirements under national procedural regimes complicate reaching compensation, and demands that national courts must loosen these requirements in certain circumstances.286 However, English rules on access to evidence are already very extensive and even some of the continental jurisdictions have beneficial aspects. Nevertheless, the rule in most continental jurisdictions is that the claimant must have sufficient evidence to satisfy the burden of proof before taking action, whereas common law systems attract Forum Shoppers by offering “… a much greater scope for launching actions on the grounds that evidence favorable to the claim might be turned up during discovery”.287 If claimants are aware of the higher costs that would emerge in England, it might be beneficial to choose it as forum to take advantage of the disclosure system. This situation does not even change if the Directive proposed by the Commission ensures that there is a minimum level of disclosure in the European Member States.288 The proposal is not as far-reaching as the English rules; it requires that the claimant has “… presented reasonably available facts and evidence showing plausible grounds for suspecting that he, or those he represents, has suffered harm caused by the defendant’s infringement of competition law …”.289 Additionally, the proposal is far away from being a binding legal instrument.

VI. Recognition and Enforcement of the Title Forum Shopping can also be considerable with regard to the recognition and enforcement of judgments awarding antitrust damages. A judgment handed down in a Member State shall be recognised in the Union without any special procedure being required, Art 33 (1) Brussels I. Its enforcement in contrast (still) requires the exequatur, Arts 38 et seq. Brussels I.290 As judgments are recognised automatically, it seems that claimants can enforce judgments in any of the Member States subject to 284 285 286 287 288 289 290

Hempel, Privater Rechtsschutz im Kartellrecht, p. 299. Commission Staff Working Paper accompanying the White Paper, para. 90. Commission Staff Working Paper accompanying the White Paper, para. 83. Woods, 16 Loy Consumer L Rev (2003 – 2004), p. 431 (442). See Proposal for a Directive, p. 14. Art 5 (1) Proposal for a Directive, p. 33. Becker/Kammin, EuZW (2011), p. 503 (507).

68

Part 2: Aspects of Substance, Procedure and Jurisdiction

the exequatur and will thus not have to bring a claim in the jurisdiction they plan to enforce it in. However, pursuant to Art 34 (1) Brussels I, a judgment shall not be recognised if such recognition is “… manifestly contrary to public policy in the Member State in which recognition is sought”. The content of the public policy is to be determined by the Member States themselves291 with limitations controlled by the Court of Justice of the European Union292. A question of some interest for the claimant is whether courts enforce a foreign court’s judgment awarding punitive damages following an antitrust infringement. Recital 32 Rome II indicates that, on the basis of Art 34 (1) Brussels I, courts can deny recognition and enforcement of the part of a judgment awarding non-compensatory punitive antitrust damages as being contrary to public policy. Though the Rome II Regulation is a choice-of-law instrument one may fail to see why the principle of ordre public should be different for recognition and enforcement purposes.293 A recognising court consequently does not review the judgment with regard to the merits, but refuses recognition of the judgment, as awarding punitive antitrust damages affects the basic values of the legal system.294 This problem has been mitigated in Germany after a decision of the Higher Regional Court Hamburg ruling that, despite the absence of punitive damages, German competition law is aware of civil damages claims to skim off profits which have punitive character and are therefore not contrary to public policy.295 This demonstrates that there are scenarios within the European Union where the enforcement of judgments in antitrust actions is not certain and would depend on the question where the claim has been brought. Art 39 Brussels I Recast states that judgments that are enforcable in an EU State shall be enforcable in all other Member States without any declaration of enforceability. However, Art 45 (1) (a) Brussels I Recast still allows the refusal of recignition if it would be manifestly contrary to public policy. This shows that despite the abolition of the exequatur the problem presented here will still play a role and Forum Shopping can still be considered.

291

Becker/Kammin, EuZW (2011), p. 503 (507). Schlosser, EU-Zivilprozessrecht, Arts 34 – 36 EuGVVO para. 6 with further references. 293 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 210 et seq. 294 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 211 with further references. 295 Higher Regional Court Hamburg, Decision of 18 November 2008, 6 W 50/08 paras. 37 et seq. and 48; see Section 10 of the German Act against Unfair Practices; see Section 34a of the German Act against Restraints of Competition. 292

D. Jurisdictional Rules in Cross-Border Antitrust Damages Actions

69

VII. Conclusion296 National procedural rules play an outstanding role in litigation over damages claims arising from anti-competitive conduct brought by private parties; costs especially are the determining factor to bring an action in a certain Member State. From the consumers’ point of view the availability of collective actions is of decisive significance. Common law systems offer a much greater scope for launching actions on the grounds that evidence might be disclosed during proceedings. This suggests that Forum Shopping is a practice for private parties to benefit from these differences between national procedural laws. As there is no “procedural equivalent” to the Rome Regulations, national procedural disparities are not eliminated. Judges apply their own law of civil procedure. The application of the lex fori despite such vast differences between procedural regimes on the one hand, and the significance of the matters of procedure on the other hand, suggest that the forum is the crucial factor when considering an antitrust damages claim.

D. Jurisdictional Rules in Cross-Border Antitrust Damages Actions Considering the differences between national laws in the European Union and their significance for antitrust-based litigation, Forum Shoppers will have a particular interest in benefitting from this lack of uniformity. Since the lex fori governs all matters of evidence and procedure and can be chosen by antitrust claimiants with regard to matters of substance, the forum chosen for litigation is of critical importance for the outcome of a particular case. The uncertainty of what law applies is attractive to a claimant and a “… victory in a successful jurisdictional battle may convert an unpromising case into an eminently winnable one or at least one wherein the certainty of an opponent’s victory … is considerably diminished, paving the way for a settlement … on far better terms for the jurisdictional victor”.297 The Brussels I Regulation allocates international jurisdiction and aims at unifying it by creating homogenous jurisdictional rules. As the international jurisdiction defines the lex fori, the Brussels I Regulation is the key to national substantive and procedural laws which apply to cross-border antitrust damages actions. With regard to the vast differences between domestic civil law regimes and some considerable benefits for claimants, the international jurisdiction can be considered as a key to promote private antitrust enforcement within the European Union. However, there are several problems that need to be addressed.

296 297

Vide supra Part 2 C. with references. Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.58.

70

Part 2: Aspects of Substance, Procedure and Jurisdiction

I. Claimants’ Uncertainty about the Forum Discovering which Member State’s courts are competent to hear a certain antitrust damages claim is the first step victims have to make. Small- and medium-sized undertakings’ and consumers’ lack of access to adequate legal advice can create uncertainty at the stage of defining jurisdiction. This might frighten claimants off and influence the decision whether and where to take action. A German firm which purchased products at inflated prices fixed by an international cartel will have difficulties in determining where to launch an action. The Brussels I Regulation’s structure does not support the determination of the appropriate forum. After having verified that the Brussels I Regulation applies,298 jurisdiction has to be tested by asking whether there is exclusive jurisdiction under the terms of Art 22 Brussels I. If that is denied, international jurisdiction over antitrust damages claims can be based on special provisions governing consumer contracts.299 If these provisions do not correspond either, claimants have to check whether the parties have agreed that a court of a Member State is to have jurisdiction to settle any dispute.300 Otherwise, special301 or the general302 jurisdictional rules apply.303 Even within the relevant provisions of the Brussels I Regulation, uncertainties with regard to interpretation, for example whether damages claims of contracting parties are to be characterised as tortious or contractual for jurisdictional purposes,304 aggravate legal uncertainty. Given that the Brussels I Regulation is construed for all civil and commercial matters leads to problems with regard to the special situation a party faces in litigation over antitrust damages claims. The complex determination of the right forum in accordance with the legislator’s attempt to cover all civil and commercial claims by one single Regulation gives rise to legal uncertainty.

II. Cultural Aspects Guiding Victims Despite the possibility of gaining significant procedural and substantive benefits, claimants and their lawyers are often first and foremost influenced by cultural aspects like language and familiarity with the court system. Solicitors have experienced that victims have a strong inclination to sue cartelists in the domestic forum. Six out of seven interviewees from Germany advise their clients under given circumstances to bring the action in Germany: “It is a cultural thing: you know the procedure, the 298 299 300 301 302 303 304

See Art 1 Brussels I. See Arts 15 et seq. Brussels I. See Art 23 Brussels I. See Arts 5 et seq. Brussels I. See Art 2 Brussels I. Stadler, in: Musielak, ZPO, Art 2 VO (EG) 44/2001 para. 3. Vide supra for the classification for conflict-of-law purposes, Part 2 B.II.

D. Jurisdictional Rules in Cross-Border Antitrust Damages Actions

71

lawyers, it is much more straightforward to them in order to anticipate … the outcome.”305 Only one of the German participants was not certain whether there is an inclination to sue in the Home State motivated by culture or language: “I can see that it is maybe one soft factor but it is not the [decisive] factor as you can receive advice if you work with an international firm … Maybe you would take this factor into account but you would also take into account all the other factors which are maybe less soft but more compelling in terms of legal questions, procedural questions which help you to get to your goal.”306 This opinion is quite convincing and consistent with the elaborated legal situation with regard to the differences between national laws. It causes concern that German victims have such a strong bias to claim in the domestic forum. They would rather benefit from a familiar legal system, language and other soft-factors, instead of considering differences between legal systems. In other words, the forum of the claimant’s domicile is a factor which is over weighted.

III. Position of Courts Additional to efforts to create incentives for the improvement of private enforcement of antitrust law, courts must be well-placed to hear and determine a damages claim. The official report of the Committee of Experts responsible for drafting the Brussels Convention declared even at that time, “… the rules of jurisdiction codified in Title II307 determine which State’s courts are most appropriate to assume jurisdiction, taking into account all relevant matters”.308 The Court of Justice of the European Union followed this line by stating that the jurisdictional rules, “… in the interests of legal certainty and for the benefit of the parties, confer jurisdiction upon the national court territorially best qualified to determine a dispute”.309 Art 2 (1) Brussels I states that EU-residents shall be sued in the courts of the Member State they are domiciled in. It is doubtful whether such an unspecified generalisation can address the special problems of antitrust law cases. A national court will have difficulties to comprehend the legal and economic context of conduct

305 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63). 306 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (64). 307 Now Chapter II Brussels I. 308 Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 27 September 1968, OJ (1979) C 59 p. 1 (15). 309 Court of Justice of the European Union, Judgment of 4 March 1982, Effer SpA v HansJoachim Kantner, Case 38/81, ECR 1982 p. 825 para. 6.

72

Part 2: Aspects of Substance, Procedure and Jurisdiction

which does not have any contact point with this court’s Member State.310 Effects on competition cannot be assessed distinct from the market they operate in.311

310

Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 23. Court of Justice of the European Union, Judgment of 12 December 1967, SA Brasserie de Haecht v Consorts Wilkin-Janssen, Case 23-67, English special edition p. 407 (415). 311

Part 3

Ideas for Legal Reform The European Commission1, commentators2, solicitors3, practitioners4, and the Court of Justice of the European Union5 emphasise the significance of encouraging private enforcement of EU antitrust rules before national courts. Having outlined the meaning of national rules on the one hand, and the influence of jurisdiction and forum on the other hand, the question is whether reform should focus directly on amendments to procedural and substantive laws. Indeed, unification is a possible approach to eliminate disadvantages and unify benefits. However, another possibility is legal reform of the jurisdictional rules of the Brussels I Regulation to have an indirect impact on national law and allow claimants to benefit from differences between the regimes. Apart from the question whether the primary objective should be to amend procedural and substantive or jurisdictional rules, analysis will be made as to whether there are ideas for reform inspired by the US system of private antitrust enforcement. This system has been a role model for Europe in many respects and has always served as source of inspiration.6 The United States of America and the European Union have widely different approaches to prevent antitrust infringements and to compensate victims. Some characteristic differences shall be presented to see advantages as well as disadvantages and to find out whether the US system can model itself on the progressing European system.

1

White Paper on Damages actions, p. 1 et seq. Beschorner/Hüschelrath, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 9 (10); Komninos, EC Private Antitrust Enforcement, p. 8 et seq. 3 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (159 et seq.). 4 Böge/Ost, ECLR (2006), p. 197. 5 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 paras. 26 et seq. 6 Becker, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 37 (39); Pheasant, 21 Antitrust (2006 – 2007), p. 59. 2

74

Part 3: Ideas for Legal Reform

A. Approach of the United States These days, as certain measures have been perceived to lead to excesses in private enforcement, the US model serves almost as a negative example only.7 Nevertheless, the US perspective is of interest for the modernisation of any antitrust systems, as modern antitrust law has a longer history in the United States than in Europe. Together with Europe it plays the “… predominant role in global antitrust governance”.8

I. Different Approaches The US legal system encourages private enforcement of both private and public rules to achieve compensation and behaviour control.9 Consequently, barriers for claimants are reduced or removed to incentivise them to take action. The funding of litigation, the non-existence of a cost shifting rule, an extensive regime of access to evidence, the availability of class actions, enhanced bonus fees for lawyers in the event of success, and punitive damages are some considerable features that exist in the United States and form a coherent system.10 Though three governmental bodies11 have jurisdiction to enforce federal antitrust laws, ninety per cent of antitrust infringements are enforced by private parties12 which underlines the discrepancy to the European system where the focus is still on public enforcement. Private rights for action have been part of US antitrust law since its inception.13 EU Member States and the European Union itself are characterised by a combination of public and private enforcement resulting in a mutual influence. This is emphasised by the fact that there are almost only follow-on actions and no standalone actions.14 Public enforcement is a necessary precondition of damages claims.

7 Becker, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 37 (39). 8 Buxbaum/Michaels, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 225; see also Baker, in: Beaton-Wells/Ezrachi, Criminalising Cartels, p. 27 (27 et seq.). 9 Hodges, in: Steele/van Boom, Mass Justice, Challenges of Representation and Distribution, p. 101 (103). 10 Hodges, in: Steele/van Boom, Mass Justice, Challenges of Representation and Distribution, p. 101 (103). 11 The Department of Justice, the Federal Trade Commission and the Attorney Generals of the states. 12 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (210); Jones/ Sufrin, EU Competition Law, p. 1306. 13 Buxbaum, in: Basedow, Private Enforcement of EC Competition Law, p. 41 (43). 14 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63).

A. Approach of the United States

75

II. Characteristics of Antitrust Litigation in the United States The quite different approaches the two regimes take are indicated by the fundamental question whether damages claims have to serve compensation or deterrence, by the possibility of getting access to evidence and by the availability of collective actions. 1. Deterrence or Compensation? Among the different objectives of civil antitrust litigation, such as compensation, deterrence, punishment and deprivation of gains, compensation and deterrence are generally recognised as being the primary goals. Any system should aim at both, prevention by deterring violations and cure by compensating the victims.15 Private enforcement can contribute towards the achievement of both these objectives as compensation has a “… passive deterrent effect per se”16. However, taking a look at the development over the last years and the current legal situation, deterrence seems to have emerged as the primary objective in the US system. a) Passing-on Defence and Automatic Trebling The discussion on the question whether the passing-on defence should be admissible or not highlights the conflict between compensation and deterrence.17 The passing-on defence has not been admissible in the United States, but the US Supreme Court is about to change its case law in this respect.18 The older solution is an example in favour of deterrence by not allowing defendants to raise the defence of passingon.19 However, the change in US case law indicates that there is no significant difference between the US and EU approaches in that respect as both systems seem to favour the passing-on defence.20 The automatic and mandatory trebling of damages awards is another aspect of the US system favouring deterrence and prevention. The treble damage remedy has been a milestone of private antitrust enforcement since the enactment of the Sherman Act in 1890.21 Prima facie, the super-compensatory character of treble damages has a deterrent effect and is even considered as being a “death sentence”22 for undertakings. Nevertheless, the lack of prejudgment interest in US courts leads to the result that the

15 16 17 18 19 20 21 22

Lawrence, Eur Competition L Ann (2006), p. 457 (461). Lawrence, Eur Competition L Ann (2006), p. 457 (462). Pheasant, 21 Antitrust (2006 – 2007), p. 59 (60). Bergmann/Fiedler, BB (2012), p. 206 (207). Pheasant, 21 Antitrust (2006 – 2007), p. 59 (60). Vide supra Part 2 B.I.4.b). Cavanagh, 41 Loy U Chi LJ (2009 – 2010), p. 629. Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (220).

76

Part 3: Ideas for Legal Reform

compensation awarded is close to single damages in EU jurisdictions.23 This illustrates that the whole debate on the trebling of damages is exaggerated and does not have a significant meaning which would justify changing civil traditions. b) Merging the Approaches Allowing indirect purchasers to claim damages and allowing the passing-on defence in return is the right way to encourage victims to take action without burdening the infringers disproportionately. An analysis suggests that the US and EU regimes have started coming together with regard to the passing-on defence and the standing of indirect purchaser. It is therefore not possible to draw any fundamental conclusions. What seems more important from the European point of view is that differences among EU jurisdictions will and should be considered by claimants in order to take advantage of the legal situation. Adding penalisation to damages claims which go several times beyond the actual damage suffered goes against traditions of continental European law aiming primarily at achieving compensation24 and is therefore even unconstitutional in Germany25. As the amount awarded including prejudgment interest in EU Member States is often similar to treble damages in the United States, the introduction of treble damages should not seriously be considered in the actual debate. Additionally, the penalisation of antitrust behaviour should be left to the competition authorities that are “… best placed to find appropriate sanctions against cartel members”.26 2. Access to Evidence It has been presented that evidentiary material needed for proving a case is often held by other parties and that the claimant’s access to these documents is thus one of the decisive aims for victims of antitrust infringements.27 The different approaches of European jurisdictions have been presented.28 a) Exchange of Evidence between Parties in the United States The United States have very far-reaching29 and expensive obligations as regards the exchange of evidence between the parties. These measures of fact-finding and 23

Woods, 16 Loy Consumer L Rev (2003 – 2004), p. 431 (437) with further references. Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (220); Pheasant, 21 Antitrust (2006 – 2007), p. 59 (60); Böge/Ost, ECLR (2006), p. 197 (198). 25 Böge/Ost, ECLR (2006), p. 197 (201). 26 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (220). 27 Vide supra Part 2 C.V.1. with references. 28 Vide supra Part 2 C.V.2. 29 Schack, Einführung in das US-amerikanische Zivilprozessrecht, p. 45. 24

A. Approach of the United States

77

securing of evidence constitute a distinct part of the procedure and take place before the oral proceedings.30 Rule 26 (a) of the Federal Rules of Civil Procedure codifies the rules on initial discovery and states that a party must, without awaiting a request, provide to the other parties the name, address and telephone number of each individual likely to have discoverable information that the disclosing party may use to support its claims or defences. Further, the parties have to provide a copy of all documents and information in their possession or control. It is of huge significance for victims in antitrust cases that Rule 26 (a) of the Federal Rules of Civil Procedure also imposes an obligation to provide a calculation of each category of damages claimed by the disclosing party, who must also make available for inspection and copying the documents or other evidentiary material, unless privileged or protected from disclosure. Also the fact that victims are given the opportunity of interrogating employees of the allegedly infringing undertaking can be of great help in proving an infringement. However, disclosure does not only bring about advantages for private enforcement of antitrust law. The procedure usually slows down litigation by requiring parties to spend time and resources on producing and disclosing documents.31 Additionally, there is the danger of abuse,32 especially if the threat and prospect of exorbitant costs is used to force the other party to agree on a settlement or withdraw the case even where the claimant has little chance of success.33 b) Requirement of Related Rules On the contrary to European jurisdictions, US cost rules favour private damages claims and thereby balance the costs of disclosure. The US system does not provide for reimbursement of the winning defendant’s costs, but provides for shifting costs to the losing defendant.34 Contingency fee arrangements grant compensation for the attorney only in those cases which result in a net recovery.35 This underlines that the two regimes are fundamentally different, not only with regard to access to evidence. It is therefore not possible to pick some mechanisms from the US system and introduce them in Europe to improve the situation of antitrust damages claimants. This would require the introduction of related cost rules. The import of a litigation culture

30 Becker, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 37 (56). 31 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (67). 32 Schack, Einführung in das US-amerikanische Zivilprozessrecht, p. 45. 33 Becker, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 37 (65); Scholl, Kollektiver Rechtsschutz im Kartellrecht, p. 67. 34 Schack, Einführung in das US-amerikanische Zivilprozessrecht, p. 10. 35 Stürmer, in: Basedow, Private Enforcement of EC Competition Law, p. 163 (188) with further references; Schack, Einführung in das US-amerikanische Zivilprozessrecht, p. 8.

78

Part 3: Ideas for Legal Reform

with social costs higher than the benefits of enforcement for the overall welfare should be avoided.36 3. Collective Redress Mechanisms Collective actions in the United States constitute an important factor for why damages claims play such an outstanding role and deter potential antitrust infringements. Individual private litigation is often too risky and expensive, particularly in areas such as antitrust law.37 a) Opt-Out-Model of the United States Rule 23 of the Federal Rules of Civil Procedure allows the use of opt-out class actions as a litigation tool to spread litigation costs among litigants with similar claims. This enables litigants to bring lawsuits collectively when it would be economically unfeasible to bring individual claims.38 The 1966 amendments to Rule 23 of the Federal Rules of Civil Procedure paved the way for claimants to bring antitrust class actions.39 In the United States ninety per cent of class actions result in a settlement of the dispute. This demonstrates that obtaining a final judgment is not the primary objective of class actions.40 All class members are bound by the judgment resulting from the suit. Those who do not wish to be bound by the outcome are offered an opportunity to opt out and to bring an individual claim later.41 b) A Model for the European Union?42 On the one hand, the US class action mechanism is a particularly useful instrument for antitrust lawsuits. This has already been elaborated here. Damages claims are often directed against an undertaking’s conduct that has injured countless people, such as the fixing of purchase prices, or conspiracy.43 Opt-out class actions are a highly effective method for injured individuals to obtain redress by making it economically feasible for individuals “… with common claims of minimal individual value to aggregate those claims into one lawsuit”.44 Claims of a class can also be

36

Staff Working Paper, Annex to the Green Paper, para. 12. Russell, 28 BU Int’l LJ (2010), p. 141 (144). 38 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (137). 39 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (137 et seq.); Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35. 40 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (210). 41 Parsons, 4 SC J Int’l L & Bus (2007 – 2008), p. 35 (37). 42 Vide supra Part 2 C.II.3.b) with references. 43 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (139) with further references. 44 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (139). 37

A. Approach of the United States

79

brought when no individual claims would have been filed due to lack of information45 or a negative cost-benefit analysis46. The US model would certainly also have a deterrent effect in the EU. On the other hand, the introduction of a Union-wide opt-out system would contradict national constitutions47 and seems thus almost impossible. Additionally, class actions create specific “… costs of locating class members, notifying them, evaluating their proofs of claim, and distributing payments may be so large relative to the size of the individual claim as to result in a claim of little practical compensatory value”.48 This negative result is further supported by empirical research taking into account the participants’ views as to whether new remedies for claims should be introduced. Only for one of the German participants would an opt-out regime be the most efficient way.49 However, another interviewee stated: “We have to avoid the excesses of the United States system and therefore we have to be cautious when introducing such things.”50 This scepticism is shared by another respondent: “I think the downsides are enormous. I do not think that it will bring additional justice to the individual whereas I see that it could really interfere with the well working system and I am very sceptical especially if you look at opt-out approaches. They are foreign to most of the European legal systems and I think that they will be very hard to control.”51

III. Ideas for Reform Inspired by the US System of Antitrust Enforcement52 The analysis of the passing-on defence and treble damages demonstrates that the US and EU approaches are no longer particularly different in these respects. The US disclosure system entails significant benefits for claimants, especially giving incentives for stand-alone actions. It is therefore theoretically worth considering as an option for Europe. However, US cost rules further enhance private litigation over damages claims to balance the costs of disclosure. This illustrates that the pure and isolated introduction of US tools would not have the desired effects. Opt-out class 45

See Commission Staff Working Paper accompanying the White Paper, para. 39. Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (137). 47 See Arts 2, 103 of the German Constitution. 48 Russell, 28 BU Int’l LJ (2010), p. 141 (155). 49 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (78). 50 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (78). 51 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (78). 52 Vide supra Part 2 C.II and Part 3 with references. 46

80

Part 3: Ideas for Legal Reform

actions would bring remarkable benefits for the enforcement of antitrust law, especially for consumers. The assignment-model can – where allowed – substitute for missing mechanisms, but does not improve the situation of consumers. However, an opt-out approach does not fit the traditions of European jurisdictions and constitutional ideas.53 It also brings disadvantages for antitrust-based litigation. This is not only an argument against the presented US approaches but against any kind of harmonisation. A better solution is to protect and further develop the current system with a combination of public and private actions. The move towards private enforcement should be understood in the context of a wider change in the focus of antitrust enforcement in Europe.54 “The path towards achieving the goal of effective antitrust damages actions in Europe must be approached with caution, in order to secure the potential advantages of creating a ‘second pillar’ of enforcement in Europe, without incurring the drawbacks of badly designed private damages actions”,55 especially overenforcement. Despite the rejection of the US approach in its entirety, there are interesting procedural and substantive aspects which can be part of a more successful private enforcement regime. In particular, disclosure and collective redress mechanisms can and should contribute to the promotion of private antitrust damages actions. The decisive aspect is that they are already available in European jurisdictions to some extent.56 If victims could benefit from these existing national features, there is no need to introduce new rules and build a framework of related rules around them.

B. “European” Reform Having rejected the US approach to antitrust enforcement as a solution for Europe, focus should rather be on a reform respecting European traditions.

I. Harmonisation/Centralisation One could argue that the differences between national substantive and procedural laws create a need for harmonisation of the Member States’ rules governing antitrust-related problems. This might be justifiable in view of the fact that Arts 101 and 53 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 272; Di Fabio, in: Maunz/Dürig, Grundgesetz, Art 2 para. 12. 54 Lawrence, Eur Competition L Ann (2006), p. 457 (463). 55 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 10. 56 Vide supra Part 2 C. and Part 3 A. with references.

B. “European” Reform

81

102 TFEU form part of each Member State’s legal order and are the basis of each EU antitrust claim.57 1. Current Example The European Commission seems to be in favour of harmonisation, suggesting unifying several areas with relevance for antitrust law. A discussion of all these ideas would be outside the frame of this thesis.58 Consistently with the findings in this thesis, the proposal concerning collective redress mechanisms deserves a closer look. The European Commission suggests a combination of two complementary mechanisms of collective redress.59 It plans the establishment of representative actions, “… brought by qualified entities, such as consumer associations, state bodies or trade associations, on behalf of identified or, in rather restricted cases, identifiable victims”.60 These entities would either be officially designated in advance or certified on an ad hoc basis by a Member State for a particular antitrust infringement to bring an action on behalf of their members.61 This mechanism would be complemented by an opt-in class action which allows victims to decide explicitly whether to combine their individual claims into one single action. Should the entities not be able or willing to pursue each claim, the European Commission advocates the need of the combination of these two types of action to ensure effective collective redress for victims of antitrust infringements.62 2. Benefits of Uniform Rules Achieving the uniformity of laws of the Member States would definitely contribute to legal certainty and facilitate antitrust proceedings. One opinion is that this “development is particularly needed in the field of competition law, now that Council Regulation No. 1/2003 … has given the national courts … full competence to apply [Arts 101 et seq. TFEU] [and] in order to allow the national courts to perform this task adequately, they need uniform rules on remedies, not only with regard to claims in compensation but also with regard to claims in nullity, restitution, interim relief and, possibly, collective claims on the part of consumers. That can only be done, in an orderly way by means of an additional [EU] regulation, ensuring that judicial remedies are made available which are similar, if not identical, substantively and procedurally …”63 57 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 286 et seq. 58 See White Paper on Damages actions; see also Proposal for a Directive. 59 White Paper on Damages actions, p. 4. 60 White Paper on Damages actions, p. 4. 61 White Paper on Damages actions, p. 4. 62 White Paper on Damages actions, p. 4. 63 van Gerven, 41 CMLR, p. 505 (524); see an overview at Danov/Becker, in: Danov/ Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (87 et seq.).

82

Part 3: Ideas for Legal Reform

Indeed, harmonisation can be justified to make sure that courts do not “… award different amount of damages with regard to the very same type of breach of the very same EU competition law provision”.64 It is further argued that the diversity of domestic laws constitutes an obstacle to private actions in itself as claimants will “… have to prove the various conditions of liability as imposed by foreign law”.65 3. Negative Aspects of Centralisation a) Traditional Inconsistency First of all, harmonisation may not be achievable, as traditional domestic approaches to litigation are difficult to displace.66 In an “… expanded European Union the establishment of common rules is not only increasingly difficult to achieve, it is also increasingly undesirable as a suppression of competitive and cultural diversity”.67 In particular, rules about the presentation of evidence and the extent of disclosure - factors of outstanding significance for private antitrust enforcement – are deeply rooted in national legal traditions. They are considered “… being part of the national preserve”.68 For example, German practitioners have a reluctant attitude towards pre-trial disclosure, taking into account the potential for abuse69 and the high costs70. In addition, punitive damages are not known in most EU jurisdictions and collective redress actions do not fit in every national regime;71 class actions may cause inconsistencies within national legal systems “… in a legal environment that is generally inhospitable to collective actions”.72 This illustrates that the effects of imposing fundamental legal reform unifying several areas of the law seem highly doubtful in view of the different backgrounds and traditions of European States. National legislators should be allowed to decide whether they want to introduce certain aspects of antitrust litigation and their disadvantages. Costs and length of disclosure, the potential for abuse of opt-out class 64 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (88). 65 Study on the conditions of claims for damages in case of infringement of EC competition rules, p. 124. 66 Lawrence, Eur Competition L Ann (2006), p. 457 (466). 67 Weatherill, in: Tridimas/Nebbia, European Union Law for the Twenty-First Century, p. 11; see the idea at Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (88). 68 Lawrence, Eur Competition L Ann (2006), p. 457 (466). 69 Böge/Ost, ECLR (2006), p. 197 (202). 70 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (67). 71 Vide supra Part 2 B.I.3.a) and Part 2 C.II.3.b)cc). 72 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 310.

B. “European” Reform

83

actions and benefits for cartels through the passing-on defence are just some factors national legislators might want to consider autonomously.73 b) Legal Inconsistency Legislative changes imposed by the EU legislator will often infringe other national laws and therefore require further legal reform. For example, the trebling of damages infringes the German principle of compensation.74 Some other legislative changes would clearly contradict with national constitutional law, as demonstrated by problems with the German Constitution strictly limiting the scope of judgments to bind victims who did not opt in.75 Art 2 (1) of the German Constitution gives people a general freedom of action which protects every action and inaction and thus freedom from state coercion76. This includes the procedural guarantee not to be bound by legal actions to which the victim did not opt in. In addition, a violation of Art 103 (1) of the German Constitution is a consequence.77 The obligation to introduce an opt-out class action is therefore not possible in Germany. Even the proposal of the European Commission to introduce a combination of representative actions and opt-in class actions faces significant criticisms. It is unclear whether the class members would be responsible for paying their legal fees.78 The combination of the “loser-pays”-rule and the lack of contingency fees would probably restrain potential claimants from taking action.79 The European Commission further does not explain how it wants to ensure that all victims are notified of the legal action. The fewer participants are involved the lower is the final award and the deterrent effect.80 With regard to the proposed representative actions by qualified entities, the White Paper does not indicate which incentives the associations will be given to claim on behalf of the victims.81 It is further not specified how the entities can efficiently distribute the amount awarded to all the victims.82 These observations demonstrate that there are numerous questions left to national legislators and an incalculable number of amendments would be required. 73 Vide supra Part 2 with references for the different negative aspects that are attributed to matters on procedure and substance. 74 See Sections 249 et seq. of the German Civil Code by way of example. 75 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 272. 76 Di Fabio, in: Maunz/Dürig, Grundgesetz, Art 2 para. 12. 77 Vide supra Part 2 C.II.3.b)cc) with references. 78 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (148). 79 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (148). 80 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (149 et seq.). 81 Chieu, 18 Cardozo J Int’l & Comp L (2010), p. 123 (149). 82 Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (205) where further open questions are presented.

84

Part 3: Ideas for Legal Reform

c) Harmonisation Costs The most significant reason contradicting harmonisation is the cost factor for national jurisdictions. The legal inconsistencies result in high adaption costs. For example, to enable class actions, numerous adaptations of national legal systems are required. The German Code of Civil Procedure would have to be revised fundamentally with regard to the binding nature of judgments, standing and court proceedings. Only few countries so far allow class actions.83 “Given the fact that collective actions for damages are a novelty for many legal systems in the European Union … and changes in procedural laws may be necessary, the costs of harmonisation can be considered relatively high if opt-in collective actions must be allowed.”84 As pure opt-out class actions have even been introduced less frequently into legal systems, such costs will be even higher.85 In addition, extending the application of disclosure, punitive damages or other legal tools to all Member States – although for a precisely circumscribed set of cases – is very costly in terms of harmonisation.86

II. Decentralisation and Inter-Jurisdictional Regulatory Competition Although it is undisputed that private antitrust litigation is underdeveloped in Europe, the majority of interview respondents suggests that antitrust litigation is picking up.87 This is another hint emphasising that a fundamental change of the system of private enforcement is not necessary.88 A more promising solution is to protect and develop the system of private international law to determine the applicable law but focus on the fact that national rules benefit claimants. It has been presented here that there are efficient claimant-friendly approaches within national jurisdictions, including, inter alia, the availability of collective actions, pre-trial disclosure and beneficial presumptions. A balanced system of rules 83

Vide supra Part 2 C.II.3. See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 311. 85 See Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 316. 86 For a detailed analysis see Centre for European Policy Studies et al., Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios of 21 December 2007, Contract DG Comp/2006/A3/012 final, p. 268 et seq.; p. 345 et seq.; 412 et seq.; 457 et seq. 87 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81. 88 See also Pheasant, 21 Antitrust (2006 – 2007), p. 59 (64) with similar conclusions that are evidence of optimism. 84

B. “European” Reform

85

allowing claimants to benefit from these mechanisms, while making sure that jurisdiction is allocated to courts that are closely linked to the matter in dispute seems to be a proper solution, being more flexible and effective than harmonisation. It is indeed desirable that courts apply the same set of rules, irrespective of where the claim is brought. However, this “… ideal world does not of course exist”89 and probably will not be achievable. The objective of harmonisation and unification of internal laws or choice-of-law rules “remains utopian”90 and the goal of uniform decisions is “illusory”91. Apart from that, it is questionable whether uniform results would persist even if harmonisation was achieved.92 It has been proved that centralisation is knitted with numerous disadvantages, inconsistencies and exorbitant costs. Traditional and legal inconsistencies demonstrate that law has to develop and cannot be imposed on national jurisdictions. The solution in favour of regulatory competition between national regimes can be based on the existing framework and thus does not require fundamental changes with high costs. Additionally, different traditions of European jurisdictions are preserved, and national legislators can decide independently on the way ahead. Consequently, reform should consider the vast differences between the different national regimes and understand them as an opportunity rather than as a problem. The overwhelming majority of interview respondents from England and Germany also wants the current system to evolve. They do not see scope for a new Regulation or Directive.93 English solicitors are concerned that new EU laws do not address the uncertainty which currently deters victims, and will even enhance it.94 Therefore they are “in favour of a system of regulatory competition between procedural and substantive regimes”.95 To achieve this, the Brussels I Regulation has to be revised.

III. Fundamental Ideas for Legal Reform of the Brussels I Regulation The Brussels I Regulation needs to be revised to promote private antitrust enforcement. Some significant concerns linked with the determination of international

89

Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.02. Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.02. 91 Juenger, 63 Tulane Law Review (1989), p. 553 (574). 92 Bell, Forum Shopping and Venue in Transnational Litigation, para. 2.03. 93 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (88). 94 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (88 et seq.). 95 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (89). 90

86

Part 3: Ideas for Legal Reform

jurisdiction have been presented here.96 The decisive aspect for claimants is the opportunity to behave strategically, by weighing the advantages of different national regimes so as to have the best chance of success in litigation. A balanced system of rules allowing claimants to benefit from differences between national laws, while making sure that jurisdiction is allocated to courts that are closely linked to the matter in dispute is a flexible and effective solution. 1. Promotion of Forum Shopping to Improve Private Enforcement a) Forum Shopping The lex fori governs all matters of procedure, contrary to the case of German international jurisdiction, where German private international law determines which national law applies,97 Art 6 (3) (b) Rome II allows for opting for the lex fori in matters of substance. The Rome Regulations, by granting a choice of substantive law and a partial application of the lex fori in EU antitrust law cases, and the Brussels I Regulation, by appointing in nine of ten cases of infringement of EU antitrust law more than one forum,98 encourage Forum Shopping. In particular, a claimant who intends to sue several cartel members under Art 6 (1) Brussels I usually has a choice of forums. This choice is partly equivalent to the choice of the applicable substantive and procedural law. Considering the vast differences in domestic civil law regimes which have been elaborated on,99 strategic considerations through Forum Shopping, so as to benefit from several advantages that are unavailable Union-wide is essential for antitrust victims. The international jurisdiction can influence the outcome of the dispute and the choice of forum is therefore rightly regarded as the major decision which can be made in EU law litigation.100 Achieving compensation is necessary to guarantee the effectiveness of European antitrust rules.101 However, the exercise of this right within the European Union is still facing considerable hurdles as traditional rules of the Member States are often in96

Vide supra Part 2 D. Federal Court of Justice, Decision of 14 June 1965, BGHZ 44, 46 (50); Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 270. 98 Ashton/Vollrath, ZWeR (2006), p. 1 (4). 99 Vide supra Part 2 B. and C. 100 Lindacher, Internationales Wettbewerbsverfahrensrecht, § 26 para. 2. 101 Court of Justice of the European Union, Judgment of 13 July 2006, Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA (C-295/04), Antonio Cannito v Fondiaria Sai SpA (C-296/ 04) and Nicolò Tricarico (C-297/04) and Pasqualina Murgolo (C-298/04) v Assitalia SpA, joined Cases C-295/04 to C-298/04, ECR 2006 p. I-6619 paras. 60 et seq. 97

B. “European” Reform

87

adequate to achieve this objective.102 However, national civil regimes contain most of the components that have proved to be key in Europe and the United States to help victims to achieve compensation. Access to these beneficial rules would undoubtedly increase the chance of success of damages claims. By influencing the application of substantive and procedural provisions, claimants can take an active part in improving this risk-reward relationship and turn it into a positive one. This underlines that Forum Shopping can and will contribute to the improvement of private antitrust enforcement. b) Regulatory Competition Irrespective of any subjective gains for claimants, the possibility of choosing the forum will have another interesting effect. It will force national legislators to improve the conditions for private enforcement of EU antitrust law to make their system more attractive for private antitrust claimants. Considering that all systems of private antitrust enforcement are at an early stage, the different national regimes can also be used as a testing ground to find out which approach is most effective and beneficial. The German solicitors stated that they compare jurisdictions to find the best forum. They suggest that litigating in the Netherlands is not very costly and is thus recommended, though having to use Dutch as a language is a downside. England has a well-established litigation culture, with a tremendous bar and many advantages offered by the disclosure system. Nevertheless, antitrust damages litigation in England is extremely costly and time-consuming. Another negative aspect is that in only very few cases did English courts render a decision in favour of the claimants. With regard to Germany, it is considered an advantage that the judge is authorised to assess the quantum with a certain degree of discretion under Section 287 of the German Code of Civil Procedure, though language, length of proceedings and access to evidence are clear disadvantages for claimants.103 An interesting statement is: “Maybe as a lawyer in private practice I have a different approach. I do not see anything wrong with Forum Shopping. If there are differences, so be it. Either the Member States harmonise the systems or not, but now we have a typical case of system competition. Forum Shopping is always an important aspect for politicians in particular, but in practice every claimant would like to choose the forum which is best for his purposes.”104

102

Vide supra Part 1 C.I. and D; see Commission Staff Working Paper accompanying the White Paper, para. 5; see White Paper on Damages actions, p. 2. 103 The UK team came to a similar result stating that the respondents are aware that the United Kingdom, Germany, the Netherlands and Spain attract most private damages claims. 104 The author has these statements on file.

88

Part 3: Ideas for Legal Reform

2. Negative Attitudes towards Forum Shopping Forum Shopping is usually considered to be an aspect that should be avoided or that entails disadvantages.105 The notion is used to reproach a litigant who unfairly exploits jurisdictional rules so as to have an influence on the outcome of a certain lawsuit.106 The question is whether the claimant is really “… doing something morally reprehensible in going to an alien forum in order to obtain an advantage”.107 a) Unfairness to the Defendant One aspect which could justify the negative attitude towards Forum Shopping is possible unfairness to the defendant. The burden on a defendant is increased when trial is held in an alien forum, as the defendant would often have the expense and inconvenience of bringing evidence and witnesses to the Forum State.108 There could be further unfairness if the claimant obtains an advantage over the defendant which would not be available if the trial was held elsewhere.109 Even though there is no denying that these considerations are relevant, it is rather doubtful whether they can be transferred to cases of anti-competitive conduct. Victims of illicit agreements or practices are in an extremely weak position and deserve legal privileges, while cartelists and dominant firms are not threatened or disadvantaged by litigating in a foreign Member State. The fact that claimants are in an inferior position to the infringers can be balanced by conceding the opportunity to choose the jurisdiction. Unfairness to the defendant should not be considered an argument against it. A claimant cannot be denounced for launching an action in a certain Member State to be awarded a higher amount of compensation or to benefit from a well-established system of collective redress if he does not have the means to bring an individual lawsuit. It is also not unfairness to the defendant if the claimant gains such an advantage. If private international law makes sure that the place where trial is held and the EU antitrust damages claim have a real connecting factor, the defendant will have to accept that he is sued there as his conduct manifested a connection to the Forum State.

105 See for instance Fawcett, 35 N Ir Legal Q (1984), p. 142 (144 et seq.); Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 172 et seq.; Unberath/ Cziupka, in: Rauscher, EuZPR/EuIPR, Art 6 Rom II-VO paras. 72 et seq.; Brkan, 28 World Competition (2005), p. 479 (487); Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 48, 49, 51, 53. 106 Juenger, 63 Tul L Rev (1988 – 1989), p. 553. 107 Fawcett, 35 N Ir Legal Q (1984), p. 142 (144). 108 Fawcett, 35 N Ir Legal Q (1984), p. 142 (144) with further references. 109 Fawcett, 35 N Ir Legal Q (1984), p. 142 (144).

B. “European” Reform

89

b) Public Interest There are also public interest arguments against allowing trial in an alien forum when the natural forum is elsewhere.110 One could argue that courts might have an interest in not being seised with foreign actions as this would lead to administrative difficulties and delays.111 Further, the duty to apply foreign law might raise difficulties for a judge as he will lack expertise to a significant degree.112 The application of foreign law complicates litigation. However, a choice of forum is normally only considered if the lex fori applies, as only in these cases it is decisive in which jurisdiction the claim is brought. Courts will consequently apply their own law. The application of foreign substantive law is not a question of Forum Shopping and can also be determined by the Rome Regulations if a German claimant sues in Germany. This demonstrates that it is rather unlikely that the application of foreign law would be a problem in choice-of-law scenarios. The statement that the claim could be brought more appropriately elsewhere is definitely relevant and will be discussed later.113 However, there is also a strong public interest in favour of allowing Forum Shopping, as foreigners who take action can also help to increase the economic power of a Member State. A well-functioning legal system attracts academics and practitioners with a high degree of expertise. Antitrust-specialised courts could emerge and add to the general antitrust policy by creating high quality case law.114 To sum up, the public interest is not against a limited choice of forum in cross-border antitrust cases. 3. Limit to the Choice of Forums Despite the fact that Forum Shopping is a key to more efficiency in antitrust litigation, there must be limits. Choice cannot be understood as the unconditional freedom to choose between all European jurisdictions. Forum Shopping must be condemned in cases in which the claimant chooses a forum which is not well-placed to hear the claim or inconvenient to the defendant in order to harm him intentionally.115 For instance, a pre-emptive action aiming at a declaratory judgment may be brought before courts that lack significant expertise with EU antitrust law claims, or before courts in a forum that is known to cause delays.116 There is also the possibility 110

Fawcett, 35 N Ir Legal Q (1984), p. 142 (145). See Fawcett, 35 N Ir Legal Q (1984), p. 142 (145) with further references and experiences from the Supreme Court of the United States. 112 Fawcett, 35 N Ir Legal Q (1984), p. 142 (145). 113 Vide infra Part 5. 114 See the idea in another context at Fawcett, 35 N Ir Legal Q (1984), p. 142 (146). 115 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 172; Fawcett, 35 N Ir Legal Q (1984), p. 142 (144); see also Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (47). 116 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 172. 111

90

Part 3: Ideas for Legal Reform

that claimants act to the disadvantage of the defendants by choosing a jurisdiction that does not have any connecting factor to parties, claim and market. These considerations have to be taken into account when revising the Brussels I Regulation. Competition between jurisdictions also presents the prospect of parallel proceedings. They can either be brought by the same claimant against the same defendant in several forums or be the result of proceedings being initiated by the future defendant in form of an application for a negative declaration.117 The resulting “… difficulties extend beyond the immediate expense and inconvenience which fighting two or more sets of proceedings necessarily entails for the parties”.118 They also lead to the situation that different courts come to different and inconsistent decisions on related matters. This is detrimental to legal certainty.119 Another aspect which should be avoided is the “race to a judgment”120 to satisfy the parties’ intention to be able to claim that the previous judgment renders other proceedings res judicata.121 There is no doubt that parallel court proceedings and their incompatible outcomes have to be stopped entirely as they cause delay, injustice and costs.122 There are several approaches123 to address these problems. a) Choice-of-Law Rules Excessive Forum Shopping can be limited by choice-of-law rules discouraging those who are chasing a choice-of-law advantage.124 This has been partially achieved by some rules of the Rome Regulations. At the same time it is undermined by Art 6 (3) (b) Rome II which gives claimants the possibility of opting for the lex fori.125 However, manipulating choice-of-law rules is a very inadequate response to the problem as it does not address procedural law.126 b) Jurisdictional Rules127 Forum Shopping is facilitated by wide jurisdictional rules and can in turn be limited by creating bases of jurisdiction which require a sufficient connection of 117 118 119 120 121 122 123 124 125 126 127

Bell, Forum Shopping and Venue in Transnational Litigation, para. 3.25. Bell, Forum Shopping and Venue in Transnational Litigation, para. 1.27. Bell, Forum Shopping and Venue in Transnational Litigation, para. 1.27. Bell, Forum Shopping and Venue in Transnational Litigation, para. 3.31. Bell, Forum Shopping and Venue in Transnational Litigation, para. 3.31. McLachlan, Lis Pendens in International Litigation, p. 23. See Fawcett, 35 N Ir Legal Q (1984), p. 142 (146 et seq.). Fawcett, 35 N Ir Legal Q (1984), p. 142 (149). Vide supra Part 2 B.II.3.b) with references. Fawcett, 35 N Ir Legal Q (1984), p. 142 (150). Vide infra Part 4.

B. “European” Reform

91

claim and forum.128 A judge usually comprehends better the legal and economic context of anti-competitive conduct which has been implemented in or affects his own Member State’s market. Otherwise, linguistic, cultural, economic and legal misunderstandings come at the expense of justice. The Court of Justice of the European Union has affirmed the requirement of a connection between behaviour and market.129 This is consistent with the guiding idea of the Brussels I Regulation that “… rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor”.130 Hence, the Brussels I Regulation also recognises the necessity of jurisdictions in addition to the defendant’s forum if they are based on a close link between court and action.131 c) Lis Pendens Rules132 Another way to correct wide bases of jurisdiction and thereby a constraint to Forum Shopping is the discretion for a judge to stay or decline actions.133 This is permitted by the Brussels I Regulation.134 To guarantee the fair administration of justice, the possibility of concurrent proceedings must be minimised through an effective mechanism for resolving cases of lis pendens and related actions.135 Unlike constraining Forum Shopping through jurisdictional rules, this solution can also address the problem of parallel proceedings and irreconcilable judgments, which suggests having a combination of these mechanisms. This approach has another side as in the battle over forums the defendant is not without defence. By “Reverse Forum Shopping”136 the latter can also have an impact on the forum.137 It must therefore be made sure that these rules and any reform do not destroy such benefits given to claimants.

128

Fawcett, 35 N Ir Legal Q (1984), p. 142 (146). Court of Justice of the European Union, Judgment of 12 December 1967, SA Brasserie de Haecht v Consorts Wilkin-Janssen, Case 23-67, English special edition p. 407 (415). 130 Recital 11 Brussels I. 131 Recital 12 Brussels I. 132 Vide infra Part 5. 133 Fawcett, 35 N Ir Legal Q (1984), p. 142 (147). 134 See Arts 27 et seq. Brussels I. 135 See Recital 15 Brussels I. 136 See the notion at Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.11. 137 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.04. 129

92

Part 3: Ideas for Legal Reform

4. Availability of Collective Redress and the Claimant’s Forum Research has highlighted that there are at least two components of overriding significance: the inclination of smaller undertakings to claim for damages in the Home State, and the availability of collective actions. Bringing damages actions exclusively in the Home State clearly contradicts the incentive to allow strategic considerations to benefit from legal differences. Nevertheless, empirical research has discovered an increased willingness to claim in the Home State.138 It is therefore a possible approach to encourage claimants to use the wide bases of jurisdiction, but to give them the possibility of staying at home if they prefer. The claimant’s forum should therefore be considered to be a permanent option. It has been elaborated here how beneficial collective redress is and that class actions especially have positive effects on litigation on damages claims in terms of deterrence and compensation. Victims of anti-competitive conduct “… may be dissuaded from starting an individual action given the costs, delays and burdens involved in actions for damages in this field, compared to the value of their individual claim”.139 The collection of information is facilitated as class action lawyers are specialised on certain areas of the law such as European antitrust enforcement. This demonstrates that class actions strongly benefit consumers and small firms. This is all the more true considering that “… the pooling of interests significantly reduces the risk of litigation in terms of legal expenses”.140 In a series of individual claims, each victim of the antitrust infringement would have to be represented by his own lawyer which obviously means a significant increase of the costs for each victim.141 However, the disadvantages of several collective redress mechanisms, their foreignness towards some civil jurisdictions and the high adaption costs speak against harmonisation.142 Still, the availability is of such an overriding significance for consumers and victims with relatively small damages that claimants should be given the possibility of using existing collective redress mechanisms. 5. Stimulating National Legislators The whole concept of decentralisation and establishment of Forum Shopping through private international law is based on the fact that domestic rules contain aspects that are beneficial to claimants. Therefore, national legislators should be actively encouraged to legislate in this area. The UK Government has started con138 139 140 141 142

Vide supra Part 2 D.II. Commission Staff Working Paper accompanying the White Paper, para. 39. Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (211 et seq.). Stadler, in: Basedow, Private Enforcement of EC Competition Law, p. 195 (212). Vide supra Part 3 A.II.3.b) with references.

B. “European” Reform

93

sultations seeking to encourage “… private-sector led challenges to anticompetitive behaviour”.143 Accordingly, proposals to establish the Competition Appeal Tribunal as a major venue for competition actions in the United Kingdom, to introduce an optout collective actions regime for competition law and to ensure that private actions complement the regime of public enforcement, are discussed.144

IV. Summary From a practical point of view there is a strong case against fundamental reform and in favour of a system of regulatory competition. This submission has to be favoured because choice of forums and international jurisdiction play a remarkable role in litigation over damages claims arising from international cartels and abuses of dominance. The greater the difference between national provisions, the more relevant becomes the question where to take action. Forum Shopping as a practice is not a negative consequence of cross-border litigation; it is a “… rational response to a situation where a range of forums is available for the resolution of a given transnational dispute”.145 In particular, when taking into account that where the courts of several States have jurisdiction, claimants are given a right of choice by the legislator,146 legal advisers are not to blame if they select the forum which promises the most favourable outcome from the victim’s point of view.147 A structured reform of the Brussels I Regulation is therefore more promising than harmonisation in the field of cross-border antitrust law. If the legislator wants to promote actions against conduct which distorts competition, private parties should be able to bring the action in an advantageous forum. The Brussels I Regulation should give a balance between the principles elaborated here which form the basic framework for a proposal to revise the Brussels I Regulation. With regard to jurisdictional rules (see Part 4), the following aspects shall be considered: 1. The relevant provisions have to be predictable and comprehensible. There must be analysis whether the Brussels I Regulation, being construed for all civil and commercial matters, fits to EU antitrust law damages litigation. 143

Department for Business Innovation & Skills, Private Actions in Competition Law: A Consultation on Options for Reform, p. 3. 144 Department for Business Innovation & Skills, Private Actions in Competition Law: A Consultation on Options for Reform, p. 3 and 5 et seq. 145 Bell, Forum Shopping and Venue in Transnational Litigation, para. 6.01. 146 Report on the Convention on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters and to the Protocol on its interpretation by the Court of Justice of 9 October 1978, OJ (1979) C 59 p. 71 (97). 147 Bell, Forum Shopping and Venue in Transnational Litigation, para. 6.01.

94

Part 3: Ideas for Legal Reform

2. Forum Shopping enables claimants to compare different jurisdictions and forms the basis for strategic behaviour. Several jurisdictions should be available for claimants to let them benefit from the competition between legal systems. 3. Competent courts need to have a connection to the case to hear and determine it. 4. As there is a strong inclination of smaller undertakings to sue in their Home State, the Brussels I Regulation should more often grant a claimant’s forum. 5. Consumers should be given the possibility of using collective redress proceedings. Apart from jurisdiction, rules on lis pendens and related actions will be targeted by an analysis (see Part 5): 1. Parallel proceedings and inconsistent judgments have to be avoided. 2. Rules on lis pendens and related actions should be a second mechanism to limit abusive Forum Shopping and ensure that a well-placed court hears and determines the damages claim. 3. The defendants’ “Reverse Forum Shopping” must be constrained.

Part 4

Analysis and Reform of the Jurisdictional Rules A. Introduction/Framework Taking into account the considerations discussed above concerning the revision of the Brussels I Regulation, its scope (B.) and the different jurisdictions (C., D., E.) will be targeted by an analysis. The system of European civil procedural law is built upon the general principle that the courts of the Member State in which the defendant is domiciled have jurisdiction. By way of derogation from that principle, in exhaustively listed cases, the defendant may or must be sued in another jurisdiction.1 These rules are interpreted restrictively and cannot give rise to an interpretation going beyond the cases expressly envisaged.2 With regard to jurisdiction, two different situations can be distinguished when compensation for anti-competitive conduct is claimed. Claimant and defendant may either be parties to a contractual agreement or there is no such contractual link between them and the claim is exclusively based upon liability in tort.3 The lack of special provision in the Brussels I Regulation for antitrust infringements indicates that claims should be treated like all other civil law claims.4 Consequently, claims of damages aimed at compensation for antitrust infringement can be based on Art 2 Brussels I in the courts of the defendant’s domicile. Also Art 5 (1) Brussels I plays a significant role if the parties have a contractual relationship. In these cases the place of performance of the obligation is a possible forum (forum contractus). In particular, sales, licensing, franchise, and distribution agreements can give rise to antitrustbased litigation between contracting parties.5 However, compared to contractual 1 Court of Justice of the European Union, Judgment of 3 July 1997, Francesco Benincasa v Dentalkit Srl, Case C-269/95, ECR 1997 p. I-3767 para. 13; Hess, in: Hau/Schmidt, Facetten des Verfahrensrechts (2007), p. 53 (54). 2 Court of Justice of the European Union, Judgment of 16 July 2009, Zuid-Chemie BV v Philippo’s Mineralenfabriek NV/SA, Case C-189/08, ECR 2009 p. I-6917 para. 22 with further references; Hess, in: Hau/Schmidt, Facetten des Verfahrensrechts (2007), p. 53 (55). 3 Basedow, in: Basedow, Private Enforcement of EC Competition Law, p. 229 (231 et seq.). 4 See for anti-competitive contracts Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 24. 5 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 5 et seq.

96

Part 4: Analysis and Reform of the Jurisdictional Rules

damages claims, non-contractual matters will be the more frequent area of the private enforcement of antitrust law as “… actions for damages between parties not previously bound by privity being the non-contractual remedy par excellence”.6 Damages claims directed against price-fixing where a cartel upholds prices and causes loss to parties that do not have a contractual relationship to them can be considered as being tortious in nature. If subsequent purchasers in downstream markets bring claims against the members of a producer’s cartel whose goods they bought from wholesale traders, Art 5 (3) Brussels I applies.7 In these cases the place where the harmful event occurred is decisive (forum delicti commisi).

B. Scope of the Brussels I Regulation The jurisdictional rules of the Brussels I Regulation apply in all civil and commercial matters8 in cases in which the defendant is domiciled in a Member State of the European Union. This can be inferred from an overall view of Arts 2 et seq. Brussels I and Recitals 8 and 9 Brussels I. Recital 8 Brussels I requires a link between proceedings and the territory of the Member State. Recital 9 Brussels I goes a step further and states that defendants not domiciled in a Member State are subject to national rules of jurisdiction applicable in the territory of the Member State of the court seised. Consequently, the Brussels I Regulation is not applicable if the defendant has his domicile outside of the territory of one of the Member States and in cases within one Member State.

I. Unequal Access to Justice Breaches of the law often affect several markets and a frequent scenario is thus that a defendant has its domicile in a third State. In these cases the Brussels I Regulation does not apply. A consequence of the application of domestic law is unequal access to justice for European firms in transactions with partners from third countries, as some can easily litigate in the European Union and others cannot.9 The good functioning of the internal market and the Union’s policy both on the internal and international level require equal access to justice on the basis of clear and precise rules on international jurisdiction.10 6

Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (26). Basedow, in: Basedow, Private Enforcement of EC Competition Law, p. 229 (232). 8 Art 1 (1) Brussels I. 9 Proposal for Recast, p. 3. 10 Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of 21 April 2009, COM (2009) 175 final, p. 3. 7

B. Scope of the Brussels I Regulation

97

The European Commission therefore proposes several modifications with the aim of improving the functioning of the Brussels I Regulation in an international context.11 It plans to introduce two new Recitals in order to promote the interests of claimants and defendants and the proper administration of justice within the Union. The “… circumstance that the defendant is domiciled in a third State should no longer entail the non-application of certain Union rules on jurisdiction, and there should no longer be any referral to national law”.12 The Brussels I Regulation is therefore meant to establish a complete set of rules on international jurisdiction of Member States’ courts.13 With regard to the special jurisdictions the proposal establishes that those parts of the provisions requiring a defendant to be domiciled in a Member State shall be replaced by the neutral wording “the following courts shall have jurisdiction”14 and can therefore also be applied to third country parties.

II. Antitrust Damages Claims and Non-EU Parties Disputes raising antitrust law issues are becoming more frequent internationally and even include non-EU parties. Especially “… private actions pursued against anti-competitive practices often involve companies located in different countries, business practices of global reach, procedures in more than one State and evidentiary material spread across multiple jurisdictions”.15 In order to make private antitrust enforcement more effective, it is important for claimants, especially for European undertakings, that the Brussels I Regulation gives them the possibility of suing third State defendants in the European Union. Taking into account that claiming in a foreign forum is already a disincentive for victims, the possibility that victims will take action outside the European Union seems very remote indeed. The proposal is therefore right to create legal certainty and promote antitrust enforcement in frequently encountered situations of third country defendants involved in EU antitrust damages disputes. Unfortunately, in the Brussels I Recast, which will apply from 10 January 2015, the legislator has not adopted any of these ideas as set out in the proposal. Only Arts 18 and 25 Brussels I Recast (de lege lata Arts 16 and 23 Brussels I) allocate jurisdiction “regardless of the domicile”. It would have been a better solution to follow the European Commission’s proposal and introduce a uniform application of the jurisdictional rules to third country parties.

11

See Proposal for Recast, p. 8. See the proposed new Recital 16 Brussels I, Proposal for Recast, p. 16. 13 See the proposed new Recital 17 Brussels I, Proposal for Recast, p. 16. 14 Proposal for Recast, p. 24 et seq. 15 Basedow/Francq/Idot, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 1 (1 et seq.). 12

98

Part 4: Analysis and Reform of the Jurisdictional Rules

C. General Jurisdiction and Antitrust Damages Claims Article 2 Brussels I 1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

I. Actor Sequitur Forum Rei Art 2 (1) Brussels I claims that persons domiciled in a Member State shall be sued in the courts of that Member State (“actor sequitur forum rei”16). Pursuant to Art 60 (1) Brussels I, a company or other legal person is domiciled at the place where it has its statutory seat, central administration or principal place of business.17 Art 2 (1) Brussels I only determines the international jurisdiction,18 deciding which Member State’s courts have jurisdiction for a certain action. The local jurisdiction – appointing the competent courts within a Member State – is defined by domestic law.19 Whereas Art 2 Brussels I has the plural in its reference (“vor den Gerichten dieses Mitgliedstaats”,20 emphasis added), most of the authentic versions of Art 5 (1) and (3) Brussels I use the singular (“vor dem Gericht”, emphasis added) and allocate jurisdiction to just one single court.21 This distinction has the result that the special jurisdictions also cover the local jurisdiction of the court.22 In German courts it is determined in accordance with Sections 12 et seq. of the German Code of Civil Procedure.23

16 Schack, Internationales Zivilverfahrensrecht, § 8 para. 222; Hess, in: Hau/Schmidt, Facetten des Verfahrensrechts (2007), p. 53 (54); Gottwald, in: MüKo ZPO Volume 3, Art 2 EuGVO para. 13; Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 2 VO EG Nr. 44/2001 para. 19. 17 Art 60 (2) Brussels I states that for the purposes of the United Kingdom and Ireland statutory seat means the registered office, the place of incorporation or the place under the law of which the formation took place. 18 Gottwald, in: MüKo ZPO Volume 3, Art 2 EuGVO para. 21; Schlosser, EU-Zivilprozessrecht, Art 2 EuGVVO para. 1. 19 Gottwald, in: MüKo ZPO Volume 3, Art 2 EuGVO para. 21; Schlosser, EU-Zivilprozessrecht, Art 2 EuGVVO para. 1; Nagel/Gottwald, Internationales Zivilprozessrecht, § 3 para. 28. 20 Unfortunately, the English version does not support this conclusion. 21 Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (32). 22 Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (32); Micklitz/Rott, EuZW (2001), p. 325 (328); Staudinger/Steinrötter, JA (2012), p. 241 (243); Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 2 VO EG Nr. 44/2001 para. 41. 23 Gottwald, in: MüKo ZPO Volume 3, Art 2 EuGVO para. 21; Staudinger/Steinrötter, JA (2012), p. 241.

C. General Jurisdiction and Antitrust Damages Claims

99

A clear advantage of referring to the domicile of the defendant instead of the question whether the claim is tortious or contractual, is that there is “… no need to go into the merits of the case at the jurisdictional stage of the proceedings”.24 This facilitates identifying the competent court and would be further supported by a European definition of “domicile” which is not provided by Art 2 Brussels I. Art 59 (1) Brussels I contains a conflict-rule which declares that in order to determine whether a party is domiciled in the Member State whose courts are seised, the court shall apply its domestic law. A German judge would consequently have to define the domicile of the defendant according to Sections 7 et seq. of the German Civil Code.25 This aggravates the problem of the determination of the forum as a judge must apply substantive national law to define jurisdiction.26

II. Ratio of Protecting the Defendant Basing jurisdiction on Art 2 Brussels I leads to a single jurisdiction for several claims.27 Bundling into one action, claims arising out of infringements of Arts 101 et seq. TFEU that have been committed in different European States, is a benefit for claimants.28 However, this is the only advantage for damages claimants as the ratio of “actor sequitur forum rei” is to protect and disburden the defendant.29 The latter is privileged as it has to be sued in the courts of its domicile while claimants must take action in a foreign forum. Recital 13 Brussels I explicitly states that in “… relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules provide for”. This illustrates that claimants are not per se considered as being in need of protection, unless they belong to one of these groups. This is questionable with regard to the situation of antitrust victims and the objective of allocating jurisdiction to well-placed courts.

24

Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 87. Schack, Internationales Zivilverfahrensrecht, § 8 para. 274; Gottwald, in: MüKo ZPO Volume 3, Art 2 EuGVO para. 14; see for further critics Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 2 VO EG Nr. 44/2001 paras. 25 et seq. 26 See Hess, in: Hau/Schmidt, Facetten des Verfahrensrechts (2007), p. 53 (57 et seq.) with further examples of differences between national laws in this respect; see also Schack, Internationales Zivilverfahrensrecht, § 8 paras. 222, 274. 27 Ashton/Vollrath, ZWeR (2006), p. 1 (6). 28 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 87. 29 Schack, Internationales Zivilverfahrensrecht, § 8 para. 222; Nagel/Gottwald, Internationales Zivilprozessrecht, § 3 para. 28; critical Hess, in: Hau/Schmidt, Facetten des Verfahrensrechts (2007), p. 53 (55); see also Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 5 VO EG Nr. 44/2001 para. 4. 25

100

Part 4: Analysis and Reform of the Jurisdictional Rules

1. Situation of Antitrust Victims Claiming damages before courts of the Home Member State is advantageous for several reasons. The German Federal Court of Justice emphasises the natural interest of every citizen to have his legal dispute dealt with by his State as he knows the court system and language.30 It is easier to find a legal representation, one is familiar with the procedural law and the forum’s language is one’s own.31 This observation is supported by solicitors who experienced an inclination of antitrust victims to sue cartelists and dominant firms in the domestic forum. They are of the opinion that language, costs, predictability of the outcome and familiarity with the court system are among the decisive factors which influence the claimants’ decision not to make use of the possibility of bringing a damages claim in an alien forum. Six out of seven respondents from Germany would advise their clients under given circumstances to bring the action in Germany if possible.32 There is no doubt that the defendant who is sued against his wishes can be in need of help with the management of the case. The ratio of Art 2 (1) Brussels I is therefore to privilege the defendant by allocating jurisdiction to his domicile, the place where legal matters are arranged and assets administered.33 One nevertheless fails to see why the defendant’s forum should always be more significant than the one of the claimant34 as it can be argued that if the claimant’s action is well-founded, the defendant does not deserve protection.35 This applies all the more in antitrust cases. The idea of protecting the defendant in general civil law36 cannot be transferred to crossborder antitrust cases. Consumers, small- and medium-sized undertakings and other victims face many obstacles when deciding to claim for damages.37 As a result, many of these victims currently remain uncompensated.38 It is not justifiable to hamper their claim even more by provisions beneficial to defendants. Undertakings which usually might infringe antitrust law have resources to benefit from high-quality legal advice. They usually operate Union-wide and are used to litigating in several Member States and alien forums. For cartel members and dominant firms, it is not even always such a huge advantage to conduct the case in their Home State. On the 30

Federal Court of Justice, Decision of 14 June 1965, BGHZ 44, 46 (50). Lindacher, Internationales Wettbewerbsverfahrensrecht, § 26 para. 3. 32 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63). 33 Federal Court of Justice, Decision of 27 October 1983, BGHZ 88, 331 (335). 34 Spellenberg, EuR (1980), p. 329 (334); Leible, in: Bernreuther/Freitag/Leible/Sippel/ Wanitzek, Festschrift für Ulrich Spellenberg (2010), p. 451; see also Hess, in: Hau/Schmidt, Facetten des Verfahrensrechts (2007), p. 53 (55). 35 Spellenberg, EuR (1980), p. 329 (334). 36 Heinrich, in: Musielak, ZPO, § 13 ZPO para. 1; Federal Court of Justice, Decision of 27 October 1983, BGHZ 88, 331 (335). 37 Vide supra Part 2 C.II.1. 38 White Paper on Damages actions, p. 4. 31

C. General Jurisdiction and Antitrust Damages Claims

101

contrary, private parties are discouraged from claiming damages to achieve compensation if they have to follow the defendant to a foreign forum. Therefore it is doubtful whether the rule “actor sequitur forum rei” is an adequate instrument to deal with antitrust damages claims. 2. Determination of a Well-Placed Court Apart from the claimants’ situation, even according to objective criteria the link to the defendant’s domicile is not adequate. Judges have to comprehend the legal and economic context of anti-competitive conduct which has been implemented in or affects any of the Member States’ markets. Language, culture, economic, and legal problems can come at the expense of justice.39 The Court of Justice of the European Union affirmed that the effects on competition cannot be assessed distinct from the market they are seen to operate in.40 This underlines the significance of the competent court’s proximity to the case. There should be limits to the favouritism of one of the parties to ensure the quality of the judgment. The neutral objective that, in cross-border law cases with several jurisdictions involved, the competent court has to be able to decide the case in a satisfactory and fair way requires more flexibility. The standard and generalised allocation of international jurisdiction to the courts of the State in which the defendant is domiciled in seems to give too little scope to determine a proper forum.

III. Claimants’ Venue The defendant’s venue seems wrong in terms of legal policy aimed at compensating antitrust victims and in terms of having well-placed courts to determine a claim. The EU legislator can react to facilitate antitrust damages actions by granting claimants the possibility of bringing the action in the courts in the State in which they are domiciled. This does not constitute a situation in which courts hear claims which are not connected to the claim and the matter in dispute; rather the domicile of the claimant is just as well as connecting factor as the defendant’s domicile.

39

p. 23.

See Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims,

40 Court of Justice of the European Union, Judgment of 12 December 1967, SA Brasserie de Haecht v Consorts Wilkin-Janssen, Case 23-67, English special edition, p. 407 (415).

102

Part 4: Analysis and Reform of the Jurisdictional Rules

1. Analogy to Existing Venues In an overview of the Brussels I Regulation’s sections dealing with special fields of law41 it is remarkable that there are cases in which claimant’s venues exist. Art 9 (1) (b) Brussels I states that an insurer domiciled in a Member State may be sued in the case of actions brought by the policyholder or the insured in the courts of the place where the plaintiff is domiciled. Art 16 (1) Brussels I establishes that a “… consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled”. The insured individual has to be considered the weaker party in relation to the insurer. The consumer is in an inferior position to his contractual partners. The European Commission declared that “[t]he objective of protecting the weaker party in the case, which warrants an exception from the principle that jurisdiction lies in the defendant’s domicile in favour of the applicant’s domicile, also applies to applicants who are insured persons or beneficiary, who are likewise in a weak position in relation to the insurer”.42 Insured individuals, consumers, employees and victims of antitrust infringements face similar problems such as a lack of experience in litigating, while companies have much more experience and can split the risk of losing between several proceedings. Other parallels between these groups are the financial situation and the lack of legal knowledge.43 This demonstrates that a dedicated claimant’s venue for antitrust victims is a possible approach which is covered by the Brussels I Regulation’s ratio. However, the fact that consumers can already bring proceedings in the courts where they are domiciled under Arts 15 et seq. Brussels I illustrates that a general claimant’s venue for antitrust victims would only benefit small- and medium-sized undertakings. The assumption of equality of such firms with consumers would contradict the ratio of the Regulation. Medium-sized undertakings have fewer obstacles than consumers to bring damages actions in the courts where the defendants are domiciled. Their need of legal privileges must not be confused with the situation of consumers who are virtually unable to initiate proceedings unless through collective action.44 This demonstrates that a venue for antitrust victims would cause inconsistencies.

41

Jurisdiction in matters relating to insurance, jurisdiction over consumer contracts and jurisdiction over individual contracts of employment. 42 Proposal for a Council Regulation (EC) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of 14 July 1999, COM (1999) 348 final (Proposal for a Council Regulation (EC) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters), p. 15. 43 See in another context Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 65. 44 Vide supra Part 2 C.II.1.

C. General Jurisdiction and Antitrust Damages Claims

103

2. Home Actions versus Forum Shopping It has been shown here that Art 2 (1) Brussels I and the rule of “actor sequitur forum rei” are not always well-suited to confer jurisdiction in cross-border EU antitrust law disputes. Art 2 Brussels I cannot promote private antitrust enforcement and does not confer jurisdiction to the court which is best placed to hear and determine the case. Special jurisdictions are exceptions from Art 2 (1) Brussels I but as they have to be interpreted very narrowly,45 it is questionable whether they change the situation that claimants have to follow defendants to their domicile. However, considering that some domestic legal orders provide tools like collective redress mechanisms, disclosure, other procedural incentives and substantive rules beneficial to claimants, the mere inclination to stay at home for cultural reasons is a wasted opportunity. The victims’ bias to claim in the domestic forum to benefit from a familiar legal system, language and other soft-factors, instead of considering differences between legal systems with regard to matters of procedure and substance should not be encouraged. Indeed, the high costs of transnational antitrust actions are an important factor to be considered. Nevertheless, they should not be economised by bringing claims exclusively in the Home State.

IV. Conclusion Despite a certain inadequacy of Art 2 (1) Brussels I to address EU antitrust damages claims, the rule should not be reformed fundamentally. Turning away from the idea that claimants have to sue in the courts of the defendant’s domicile and create a claimant’s venue instead would at first sight promote private actions to achieve compensation by decreasing their expenses. However, a closer look reveals that bringing damages actions exclusively in the Home State is clearly contradicting the approach to allow strategic considerations to benefit from legal differences. As empirical research monitored an increased willingness to claim in the home forum,46 claimants should be encouraged to bring transnational actions instead. This would be in line with the guiding idea of the establishment of Forum Shopping. Also systematic considerations contradict the approach to give up the principle “actor sequitur forum rei”. A redraft of Art 2 (1) Brussels I would question the whole jurisdictional system in civil and commercial matters. The defendant’s venue is basically a proper approach to deal with jurisdictional problems,47 even if not in antitrust law. If the legislator creates more specific chapters for special fields of law such as competition, 45 Court of Justice of the European Union, Judgment of 16 July 2009, Zuid-Chemie BV v Philippo’s Mineralenfabriek NV/SA, Case C-189/08, ECR 2009 p. I-6917 para. 22 with further references. 46 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63). 47 Schack, Internationales Zivilverfahrensrecht, § 8 para. 222.

104

Part 4: Analysis and Reform of the Jurisdictional Rules

antitrust and financial law, this will reduce clarity and consequently legal certainty. Apart, Art 5 (1) and (3) Brussels I is well designed to regulate cross-border private antitrust enforcement scenarios, if it is modified and coherently applied.48 Legal reform has to focus on special jurisdictions.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims I. Possible Scenarios Contract-based EU antitrust law disputes can arise in two different forms. Antitrust law can be used as a defence to meet one party’s attempt to enforce a contract with the opposing party’s contention that the contract is void as consequence of EU antitrust law.49 In Germany the nullity of the affected contractual provision results from Section 134 of the German Civil Code jointly with Art 101 (2) TFEU.50 The judge has to determine the voidness at any time ex officio.51 Consequently, issues of jurisdiction would have been addressed before antitrust law issues are raised and jurisdiction would already have been defined by national rules of civil procedure at this stage.52 The second scenario is where the EU antitrust law claim is the central element of the action. Antitrust law is used as an offence when a claim against a contractual partner is based on a violation of antitrust provisions.53 This scenario is likely to give rise to problems with regard to the allocation of international jurisdiction.54

II. Matters Relating to a Contract/Forum Contractus Article 5 Brussels I A person domiciled in a Member State may, in another Member State, be sued: 1. (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question; (b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

48

Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (20). Fallon/Francq, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 63. 50 Kersting, ZWeR (2008), p. 252 (253). 51 See in another context Federal Court of Justice, Judgment of 22 December 1982, BGHZ 86, 184 (188 et seq.); Schack, BGB-Allgemeiner Teil, § 12 para. 254. 52 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 23. 53 Fallon/Francq, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 63. 54 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 23. 49

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

105

– in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered, – in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided, (c) if subparagraph (b) does not apply then subparagraph (a) applies.

Art 5 (1) (a) Brussels I allows claimants to sue defendants in the courts of the place of performance of the obligation in question while Art 5 (1) (b) Brussels I defines the place of performance for the sale of goods and the provision of services.55 From the perspective of general civil law, the jurisdiction in contractual law is the most significant one.56 It also plays a vital role in litigation over damages claims arising from antitrust infringements if the parties have a contractual relation. In particular sales, licensing, franchise, and distribution agreements can give rise to antitrust-based litigation between contracting parties.57 1. Contribution to Private Antitrust Enforcement For several reasons, the application of Art 5 (1) Brussels I is clearly advantageous to claimants. Defendants cannot influence the forum by changing their domicile.58 The purpose of Art 5 (1) Brussels I is to centralise jurisdiction for all disputes resulting from a contract59 and facilitate proceedings by the link between the court and the place of the performance.60 Indeed, these courts are significantly better placed to hear an action than the courts of the place where the defendant is domiciled. Art 5 (1) Brussels I gives an additional possibility of suing in a forum other than the one of the defendant’s domicile. The forum contractus and the of the defendant’s domicile are not in a relationship of reciprocal exclusivity. This demonstrates that Art 5 (1) Brussels I allows claimants to choose between forums, to benefit from differences in national laws. For example, in the case of an anti-competitive sales contract, if the goods were delivered at the claimant’s domicile,61 the latter has the opportunity of bringing the action in his home forum. As the place of performance is

55

Art 5 (1) (c) Brussels I demonstrates that the two sub-paragraphs are independent bases of claims. This idea is supported by the fundamentally different approaches of the provisions to define the place of performance. 56 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 1. 57 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 5 et seq. 58 Schack, Internationales Zivilverfahrensrecht, § 8 para. 286. 59 Schlosser, EU-Zivilprozessrecht, Art 5 EuGVVO para. 10. 60 Court of Justice of the European Union, Judgment of 6 October 1976, Industrie Tessili Italiana Como v Dunlop AG, Case 12-76 ECR 1976 p. 1473 para. 13; see also Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 5 VO EG Nr. 44/2001 paras. 6 et seq. 61 See Art 5 (1) (b) Brussels I.

106

Part 4: Analysis and Reform of the Jurisdictional Rules

not always the place where the plaintiff is domiciled, the name “plaintiff’s venue”62 is not adequate. However, it underlines that in comparison to the general jurisdiction, claimants usually benefit from opting for the place of performance. Consequently, in line with the basic idea in this thesis for legal reform to allow for limited Forum Shopping through jurisdictional rules, Art 5 (1) Brussels I is of outstanding significance for claimants. However, private antitrust damages claimants only benefit if the jurisdiction for contractual law covers those respective scenarios that play a role in litigation over damages claims arising from antitrust infringements. The decisive questions are thus whether antitrust damages claims can be characterised as being contractual (2.), how the place of performance is defined (3.) and whether there are other problems with regard to the jurisdiction over damages claims (4. and 5.). 2. Distinction between Contractual and Non-Contractual Matters a) Significance of the Distinction The significance of the characterisation of the claim can be illustrated by two examples.63 A German distributor of goods doing business in the United Kingdom meets the requirements to become part of a selective distribution system. He nevertheless has not been accepted by a French manufacturer. The potential German distributor can sue in France based on Art 2 (1) Brussels I (domicile of the defendant) or Art 5 (3) Brussels I (place of the harmful event) and he can opt to sue in the United Kingdom based on Art 5 (3) Brussels I (place where the harm occurred).64 If the distributor from Germany has an exclusive distribution agreement for the United Kingdom and does not comply with the anti-competitive conditions imposed by the French manufacturer whereas the latter delivers the goods with delay, the distributor can bring an action for nullity and damages in France based on Art 2 (1) Brussels I (domicile of the defendant) but also in Germany or the United Kingdom based on Art 5 (1) (b) Brussels I (place of delivery being the place of performance) or in the United Kingdom based on Art 5 (1) (a) Brussels I (place of exclusivity, related to the distribution agreement, not the sale of goods).65 These scenarios and their different outcomes illustrate on the one hand that the distinction between contractual and non-contractual claims is far from being aca62

Irritating Nagel/Gottwald, Internationales Zivilprozessercht, § 3 para. 36. See the examples at Poillot-Peruzzetto/Lawnicka, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 131 (140); vide infra Part 4 E. for the jurisdiction in tort-based EU antitrust damages claims. 64 Poillot-Peruzzetto/Lawnicka, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 131 (140). 65 Poillot-Peruzzetto/Lawnicka, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 131 (140). 63

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

107

demic; rather it has a huge practical significance, being decisive for the forum. On the other hand it underlines that Forum Shopping is an interesting benefit for claimants who are given the possibility of strategic considerations with regard to venue and forum. b) Interpretation As Art 5 (1) Brussels I applies to matters relating to a contract, it has to be established whether these notions have to be defined autonomously and have an independent meaning or by reference to national law, namely the lex fori or lex causae. The Court of Justice of the European Union stated in another context that neither the one nor the other interpretation has absolute priority66 but leaned towards an autonomous interpretation in a later case with regard to matters relating to a contract67. Though decided under the Brussels Convention this ruling has still unrestricted validity as objectives and valuation of both Convention and Regulation are identical.68 c) Scope of Contractual Matters The Court of Justice of the European Union defined matters relating to tort, delict or quasi-delict “… as an independent concept covering all actions which seek to establish the liability of a defendant and which are not related to a ‘contract’ within the meaning of [Art 5 (1) Brussels I]”.69 It thereby declared that the characterisation of a legal relationship as a contractual one takes precedence. From an antitrust law point of view this means that the concept of contractual matters governs all actions in which the parties are parties to the restrictive agreement or contract.70 aa) Voidness of Contractual Agreements The question is whether it makes a difference if a contractual agreement is void due to a breach of Arts 101 et seq. TFEU. An agreement which infringes Arts 101

66 Court of Justice of the European Union, Judgment of 6 October 1976, Industrie Tessili Italiana Como v Dunlop AG, Case 12-76 ECR 1976 p. 1473 paras. 10 et seq. 67 Court of Justice of the European Union, Judgment of 22 March 1983, Martin Peters Bauunternehmung GmbH v Zuid Nederlandse Aannemers Vereniging, Case 34/82, ECR p. 987 paras. 9 et seq; see also Schack, Internationales Zivilverfahrensrecht, § 8 para. 291. 68 Stadler, in: Musielak, ZPO, Vorbemerkung zu VO (EG) Nr. 44/2001 para. 6. 69 Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 18; Court of Justice of the European Union, Judgment of 27 October 1998, Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002, Case C-51/97, ECR 1998 p. I-6511 para. 22; Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 36. 70 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (24).

108

Part 4: Analysis and Reform of the Jurisdictional Rules

or 102 TFEU is automatically void.71 The voidness is directly effective, which means that no prior decision to that effect is required.72 Also judges have to respect the nullity ex officio.73 National courts verify whether the legal requirements for the nullity are existent. The Court of Justice of the European Union ruled that for the Brussels Convention “… the national court’s jurisdiction to determine questions relating to a contract includes the power to consider the existence of the constituent parts of the contract itself, since that is indispensable in order to enable the national court in which proceedings are brought to examine whether it has jurisdiction under the Convention”.74 This leads to the conclusion that Art 5 (1) Brussels I applies even if it is merely arguable whether the contract has actually been concluded or whether it is legally effective.75 However, as a provision which infringes Arts 101 or 102 TFEU does not have any legal effects, not even against third parties,76 it is still debatable whether Art 5 (1) Brussels I applies.77 The wording of Art 5 (1) (a) Brussels I, “place of the performance of the obligation”, seems to suggest that Art 2 (1) Brussels I applies, as in the case of an infringement of Arts 101 or 102 TFEU there is no legal effect and consequently no performance of an obligation. The German wording “vor dem Gericht des Ortes, an dem die Verpflichtung erfüllt worden ist o d e r z u e r f ü l l e n w ä r e ” (emphasis added) seems to cover the place where the obligation was fulfilled and the place where it should be fulfilled. This seems to allow a wider interpretation of the scope of an obligation. Relying on the place where the contractual obligation should be fulfilled suggests that no valid obligation is required. However, the German wording has to be understod in another way. It means that as long as the obligation is not fulfilled the place where it will be fulfilled is relevant. This illustrates that even the German wording of Art 5 (1) Brussels I does not explicitly determine jurisdiction in cases of void contracts. Nevertheless, English courts prefer a wider interpretation, deciding that there is a matter relating to contract where the claimant brought an action for a negative declaration that no contract existed. The court came to this result by stating that the 71

Art 101 (2) TFEU Art 1 Regulation 1/2003. 73 Schmidt, in: Immenga/Mestmäcker, Wettbewerbsrecht Volume 1 EU, Art 101 Abs. 2 AEUV para. 14. 74 Court of Justice of the European Union, Judgment of 4 March 1982, Effer SpA v HansJoachim Kantner, Case 38/81, ECR 1982 p. 825 para. 7. 75 Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 5 VO EG Nr. 44/ 2001 para. 57 with further references. 76 Schmidt, in: Immenga/Mestmäcker, Wettbewerbsrecht Volume 1 EU, Art 101 Abs. 2 AEUV para. 18 with further references. 77 See Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 27 et seq. 72

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

109

defendant is contending the existence of a contract.78 This view that a claim for a declaration that a contract is null and void under Art 101 (2) TFEU must be characterised as contractual is further underlined by Art 12 (1) (e) Rome I.79 It expressly provides that the law applicable to a contract shall govern “… the consequences of nullity of the contract”. If the nullity of a contract is a matter relating to a contract for choice-of-law purposes, there is no reason why it should be different with regard to jurisdiction.80 It follows that Art 5 (1) Brussels I applies to actions for nullity, for declaration of validity and to actions for performance of a contractual obligation in which the antitrust infringement is raised by the contracting party claiming that the contract is void as a consequence of EU antitrust law.81 This is consistent with the interpretation given by the Court of Justice of the European Union. bb) Damages Claims of a Contracting Party Art 5 (1) Brussels I also applies to actions for damages claimed by one of the contracting parties against the other if the latter is responsible for the breach of antitrust law. This scenario is likely to be relevant in relation to those distribution contracts in which the liability for the infringement can be exclusively attributed to the supplier.82 However, in an overview of the relevant literature,83 it should be noted that damages actions for private antitrust enforcement are categorised as being

78

Court of Appeal, Boss Group v Boss France, 2 April 1996, 4 All ER (1996) p. 970 (975). Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 30. 80 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 30 with further references; Recital 7 Rome I states that the provisions should be consistent with the Brussels I and the Rome II Regulations. 81 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (24) with further references; see also Fallon/Francq, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 63. 82 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (24). 83 Brkan, 28 World Competition (2005), p. 479 (486 et seq.) does not even mention Art 5 (1) Brussels I in this context; Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 20 states that in “… any case, it is beyond question that that an EU antitrust damages action should be tortious in nature”; Idot, in: Basedow, Private Enforcement of EC Competition Law, p. 85 (86) is not clear but states that there are “… actions for tort damages following the cancellation of a contract”; Withers, JBL (2002), p. 250 (260) states that “[w]hile claims related to the purchase of goods or services at artificially inflated prices will invariably involve a contract of sale, it would be a misconstruction of the nature of such claims to suggest they are related to contract, within the meaning of Article 5(1) of the Regulation”; even the Commission declares in this context that “… defendants can either be sued in the courts of the state where they are domiciled or – at the choice of the claimant – in the courts of the state where the harmful event occurred”, see Green Paper on Damages actions, p. 10; see numerous further references at Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (22) footnote 30. 79

110

Part 4: Analysis and Reform of the Jurisdictional Rules

tortious with the consequence that only Art 5 (3) Brussels I applies.84 This approach is questionable considering that the European Court of Justice ruled that the characterisation of a legal relationship as contractual takes precedence.85 Consequently, one should be careful with defining antitrust claims as tortious without verifying whether there are contractual obligations to consider. Having shown that there are contractual elements even after a contract has been invalidated, such a development should not be followed.86 A clear interpretation is the basis for legal certainty and thus to create incentives for private parties to sue. Art 5 (1) Brussels I plays a key role in antitrust-based litigation even with regard to damages claims, and is thus a valuable approach to boost private enforcement by giving claimants the additional possibility of suing the defendant in the forum contractus, which is also usually well-placed to hear the claim. 3. Place of Performance of the Obligation in Question Within the framework of Art 5 (1) Brussels I two fundamental questions concerning the place of performance have to be raised: How is the place of performance defined and which obligation is the decisive one?87 a) Interpretation under the Brussels Convention Art 5 (1) Brussels Convention had a wording almost identical to Art 5 (1) (a) Brussels I. The Court of Justice of the European Union ruled that it is for the competent court to establish whether the place of performance is situated within its jurisdiction. The court had to determine the law which applied and consequently define the place of performance in accordance with its own conflict-of-law rules.88 The unsatisfactory consequence was that, before determining international juris-

84

Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (22 et seq.). Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 18; Court of Justice of the European Union, Judgment of 27 October 1998, Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002, Case C-51/97, ECR 1998 p. I-6511 para. 22; Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 36. 86 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (23); Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (48) at least claims that such an interpretation is “… not beyond the bounds of possibility”. 87 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 21. 88 Court of Justice of the European Union, Judgment of 6 October 1976 Industrie Tessili Italiana Como v Dunlop AG, Case 12-76, ECR 1976, p. 1473 para. 13. 85

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

111

diction, the applicable substantive law had to be identified. This put a strain on the identification of the forum.89 The Court of Justice of the European Union further ruled that Art 5 (1) Brussels Convention could not be interpreted as referring to any obligation arising under the contract in question. To determine the place of performance, the relevant obligation was the one which corresponded to the contractual right on which the claimant’s action was based.90 According to the Court of Justice of the European Union “obligation” meant the “contractual obligation forming the basis of the legal proceedings”.91 This interpretation resulted in a fragmentation of jurisdiction, as different disputes arising from one contractual relationship could trigger different jurisdictions92 and the same court did not have jurisdiction to hear a whole claim based on two equally relevant obligations arising from the same contract when they had to be performed in different countries93. The Court of Justice of the European Union did not attach much significance to these concerns as the claimant always had the possibility of bringing his entire claim before the courts of the place of the defendant’s domicile.94 However, it has been demonstrated that the defendant’s venue is not always perfectly suited to deal with transnational antitrust damages actions and cannot be of equal value for all claimants.

89

Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 23 with further references; Kropholler/von Hinden, in: Schack, Gedächtnisschrift für Alexander Lüderitz (2000), p. 401 (402). 90 Court of Justice of the European Union, Judgment of 6 October 1976, A. De Bloos, SPRL v Société en commandite par actions Bouyer, Case 14-76, ECR 1976, p. 1497 para. 13. 91 This was supported by the German version of Art 5 (1) Brussels Convention which stated: “Eine Person, die ihren Wohnsitz in dem Hoheitsgebiet eines Vertragsstaats hat, kann in einem anderen Vertragsstaat verklagt werden, wenn ein Vertrag oder Ansprüche aus einem Vertrag den Gegenstand des Verfahrens bilden, vor dem Gericht des Ortes, an dem die Verpflichtung erfüllt worden ist oder zu erfüllen wäre”, see Court of Justice of the European Union, Judgment of 6 October 1976, A. De Bloos, SPRL v Société en commandite par actions Bouyer, Case 1476, ECR 1976, p. 1497 para. 11; Kropholler/von Hinden, in: Schack, Gedächtnisschrift für Alexander Lüderitz (2000), p. 401. 92 Gsell, IPRax (2002), p. 484 (486); Kropholler/von Hinden, in: Schack, Gedächtnisschrift für Alexander Lüderitz (2000), p. 401 (402). 93 Under Art 2 Brussels Convention, see Court of Justice of the European Union, Judgment of 5 October 1999 Leathertex Divisione Sintetici SpA v Bodetex BVBA, Case C-420/97, ECR 1999 p. I-6747 para. 40. 94 Under Art 2 Brussels Convention, see Court of Justice of the European Union, Judgment of 5 October 1999 Leathertex Divisione Sintetici SpA v Bodetex BVBA, Case C-420/97, ECR 1999 p. I-6747 para. 41.

112

Part 4: Analysis and Reform of the Jurisdictional Rules

b) Interpretation de Lege Lata aa) Art 5 (1) (b) Brussels I Despite the same wording of Brussels I Regulation and Convention, the legislator decided to turn partly away from the case-law that has been presented in the light of the Brussels Convention by inserting Art 5 (1) (b) Brussels I.95 The place of performance of the obligation in question shall be, in the case of the sale of goods, the place in a Member State where the goods were delivered or should have been delivered. In the case of provision of services, it is the place in a Member State where the services were provided or should have been provided.96 Hereby, the legislator put an end to the legal situation under the Brussels Convention “… under which the place of performance was determined, for each of the obligations in question, in accordance with the private international rules of the court seized of the dispute”.97 The introduction of an autonomous definition of the place of performance for the two most frequent contracts made a contribution to more legal certainty.98 Additionally, the place of performance is no longer determined for the obligation which is concrete disputable but for the one which shapes the whole contractual relationship.99 This was explicitly intended by the European Commission stating that this determination of the place of performance should apply regardless of the obligation in question and the European Commission proposed that it should also apply where the claim relates to several obligations arising from one contract.100 bb) Benefits for Private Enforcement of Antitrust Law The amendments to Art 5 (1) Brussels I make the allocation of jurisdiction more predictable and improve the conditions for private enforcement. The introduction of Art 5 (1) (b) Brussels I establishes one forum contractus for all claims founded on one contract101 and thus avoids fragmentation of jurisdiction.102 This is, inter alia, a big benefit for antitrust damages claimants. The consequent question is whether 95 Court of Justice of the European Union, Judgment of 3 May 2007, Color Drack GmbH v Lexx International Vertriebs GmbH, Case C-386/05, ECR 2007 p. I-3699 para. 39. 96 See Art 5 (1) (b) Brussels I. 97 Court of Justice of the European Union, Judgment of 3 May 2007, Color Drack GmbH v Lexx International Vertriebs GmbH, Case C-386/05, ECR 2007 p. I-3699 para. 39. 98 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 27; Court of Justice of the European Union, Judgment of 3 May 2007, Color Drack GmbH v Lexx International Vertriebs GmbH, Case C-386/05, ECR 2007 p. I-3699 para. 24. 99 Staudinger/Steinrötter, JA (2012), p. 241 (247). 100 Proposal for a Council Regulation (EC) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, p. 14. 101 Court of Justice of the European Union, Judgment of 3 May 2007, Color Drack GmbH v Lexx International Vertriebs GmbH, Case C-386/05, ECR 2007 p. I-3699 para. 26. 102 Gsell, IPRax (2002), p. 484 (486) with further references.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

113

Art 5 (1) (a) Brussels I can be interpreted in the light of Art 5 (1) (b) Brussels I. By retaining the Convention’s wording in Art 5 (1) (a) Brussels I the legislature aimed to ensure continuity, as is apparent from Recital 19 Brussels I.103 Consequently, the Court of Justice of the European Union ruled that “… in the absence of any reason for interpreting the two provisions differently, consistency requires that [Art 5 (1) (a) Brussels I] be given a scope identical to that of the corresponding provision of the Brussels Convention, so as to ensure a uniform interpretation …”.104 This is indeed a proper way to achieve a uniform interpretation of Brussels Convention and Brussels I Regulation. It is nevertheless a “half-hearted”105 compromise106 attaching too much significance to the two types of contracts listed in Art 5 (1) (b) Brussels I107. Critics claim there is no reason for this distinction.108 c) Consequences for Transnational Antitrust Actions The different outcomes depending on the question whether Art 5 (1) (a) Brussels I or Art 5 (1) (b) Brussels I applies can influence antitrust-based litigation. The place of performance of agreements relating to sale of goods and provision of services is defined by Art 5 (1) (b) Brussels I. The question is thus whether transnational antitrust damages claims arise from these two types of contracts. aa) Sale of Goods Agreements relating to sale of goods often infringe Arts 101 and 102 TFEU and give rise to damages actions. If a German producer sells goods to an English retailer and prohibits their export or sale at less than a certain price,109 an infringement of EU antitrust law is more or less evident unless it is not a parent-subsidiary agreement110. A sales contract may also contain a clause requiring an English buyer to purchase all his supplies of a certain product by a German supplier with a dominant position. 103

Court of Justice of the European Union, Judgment of 23 April 2009, Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst, Case C-533/07, ECR 2009 p. I-3327 paras. 48 et seq. 104 Court of Justice of the European Union, Judgment of 23 April 2009, Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst, Case C-533/07, ECR 2009 p. I-3327 para. 51. 105 Schack, Internationales Zivilverfahrensrecht, § 8 para. 303. 106 Kropholler/von Hinden, in: Schack, Gedächtnisschrift für Alexander Lüderitz (2000), p. 401 (409). 107 Leible, in: Bernreuther/Freitag/Leible/Sippel/Wanitzek, Festschrift für Ulrich Spellenberg (2010), p. 451 (453). 108 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 31 with further references. 109 See the example at Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 26. 110 Court of Justice of the European Union, Judgment of 24 October 1996, Viho Europe BV v Commission of the European Communities, Case C-73/95 P., ECR 1996 p. I-5457 para. 51.

114

Part 4: Analysis and Reform of the Jurisdictional Rules

Additionally, the English buyer would not be allowed to buy and resell goods of competitors of the dominant German undertaking.111 Such a clause would be a breach of Art 102 TFEU. Another form of conduct which can infringe Arts 101 et seq. TFEU and play a role in agreements relating to sale of goods is tying,112 a practice where a product’s supplier obliges buyers also to buy a second product.113 If a victim decides to claim for damages, Art 5 (1) (b) Brussels I would give him the opportunity of suing at the place where the goods were delivered or should have been delivered. This is to the claimants’ benefit as they are given the advantages, shown above, of an autonomous interpretation of the place of performance such as legal certainty and the allocation of one forum for the whole dispute. Another benefit is that in these cases the forum contractus is often the place where the claimant is domiciled instead of where the defendant is domiciled under Art 2 (1) Brussels I. bb) Provision of Services The other type of contractual agreement covered by Art 5 (1) (b) Brussels I addresses the provision of services. Prima facie, they do not seem to give rise to antitrust damages litigation. However, numerous EU antitrust cases are concerned with franchise and distribution contracts. These could be categorised as containing agreements relating to the provision of services or sales of goods and consequently be covered by the scope of Art 5 (1) (b) Brussels I. Another possible approach is to classify them as none of these.114 The result would be that the general rule of Art 5 (1) (a) Brussels I applies. This classification is of significant practical importance as it decides whether the place of performance has to be determined autonomously or lege causae by reference to the national law of the forum. Producers do not sell their goods directly, but reach end consumers through intermediaries, wholesale traders, and retailers.115 This distribution system is implemented by distribution and franchise contracts. Such agreements involve elements of sale but also other services116 such as the advertising of the product. One approach is to evaluate these different elements separately with the result that there is at least a sale of goods element to which Art 5 (1) (b) Brussels I applies.117 However, it is not 111

See the example at Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 36. 112 Motta, Competition Policy, p. 460. 113 See for the contractual tying, Commission Decision of 22 December 1987 (IV/30.787 and 31.488 – Eurofix-Bauco v Hilti), OJ (1988) L 65 p. 19 para. 98; see the example at Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 36. 114 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 37 et seq. 115 Motta, Competition Policy, p. 302. 116 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 40. 117 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 41 with further references.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

115

appropriate to compartmentalise these complex contracts as Art 5 (1) (a) Brussels I and Art 5 (1) (b) Brussels I might apply at the same time.118 This would complicate the determination of the forum. An indication for the proper classification of distribution and franchise agreements can be found in the Rome I Regulation.119 Unlike other contracts for the provision of services, franchise and distribution contracts are not covered by Art 4 (1) (b) Rome I and have special provisions in Art 4 (1) (e) and (f) Rome I. Nevertheless, Recital 17 Rome I states that franchise and distribution contracts are contracts for services. As it is convincing to classify the whole contract as just one contract, Art 5 (1) (b) Brussels I must apply to franchise and distribution agreements.120 There are numerous other contracts that fall under the scope of “provision of services” of Art 5 (1) (b) Brussels I such as contracts relating to the transport of passengers121, management contracts122 and several other contracts123. cc) Other Agreements The above analysis illustrates that Art 5 (1) (b) Brussels I plays a major role in transnational antitrust damages litigation. Claimants can benefit from the positive amendments introduced by the Brussels I Regulation. However, there are contractual agreements that do not fall under the scope of Art 5 (1) (b) Brussels I but still give rise to antitrust damages litigation such as licensing agreements. A licensing agreement is when a licensor grants to a licensee an exclusive right to exploit an intellectual property right and in return he receives a royalty.124 As such intellectual property rights are not physical, licensing agreements cannot be categorised as the sale of goods.125 Also they are not the provision of services.126 Damages claims arising will have to be based on Art 5 (1) (a) Brussels I with the shown disadvantages. Additionally, there are scenarios where the parties to a horizontal anti-competitive agreement claim for damages. Firms might agree on each other’s exclusivity in a 118

p. 41. 119

See Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims,

Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 44. Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 44. 121 Court of Justice of the European Union, Judgment of 9 July 2009, Peter Rehder v Air Baltic Corporation, Case C-204/08, ECR 2009 p. I-6073 para. 40. 122 Higher Regional Court Cologne, Judgment of 1 September 2006, 19 U 65/06 para. 19. 123 See for a detailed analysis Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 44. 124 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 38 with further references. 125 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 38. 126 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 38 et seq. with further references. 120

116

Part 4: Analysis and Reform of the Jurisdictional Rules

particular market in the European Union and that “… none will poach on the others’ territories”.127 A similar instrument is the division of a market according to classes of purchasers when one firm only supplies trade customers while others supply retailers or public institutions128. Parties can “… agree on their marketing strategies and on sharing commercial information on pricing”.129 The market may freeze and the local producer can claim that the agreement allows the exchange of commercial information, and so it is in conflict with EU antitrust law.130 Such agreements may result in harm for one of the contracting parties. The jurisdiction of courts with regard to damages claims arising out of such agreements will be determined on the basis of Art 5 (1) (a) Brussels I as they are neither agreements relating to the sale of goods nor the provision of services as required by Art 5 (1) (b) Brussels I.131 However, these scenarios should not be focussed on as they are only of little significance for the aim of private antitrust enforcement, as victims are usually members of the cartel and not “real victims”. d) Reform Ideas for the Place of Performance The positive changes brought by the Brussels I Regulation132 benefit claimants. However, there are still scenarios, such as licensing agreements, in which jurisdiction with regard to contract-based antitrust claims is determined by Art 5 (1) (a) Brussels I. Assessing jurisdiction is hampered as the determination of the place of performance is made by reference to the law applicable under the conflict-of-law rules of the court seised. This is an unsatisfactory outcome as several places of performance are a possible consequence. Different disputes arising from one contractual relationship can trigger different jurisdictions. One possible reform approach to circumvent these shortcomings is to interpret Art 5 (1) (a) and (b) Brussels I uniformly. There are suggestions that the place of performance should be identified for all types of contract as the place where the characteristic contractual obligation has been fulfilled or should have been fulfilled, thus an interpretation of Art 5 (1) (a) Brussels I in the light of Art 5 (1) (b) Brussels I.133 Such a proposal cannot be followed. It would be in contrast to the legislator’s intention as the problems were well-known at the time of the draft of the Brussels I Regulation. The introduction of Art 5 (1) (b) Brussels I in combination with keeping the Brussels Convention’s wording does not allow a uniform inter127

Whish, Competition Law, p. 513. Whish, Competition Law, p. 513. 129 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 46. 130 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 46. 131 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 46. 132 Vide supra Part 4 D.II.3.b)bb). 133 Micklitz/Rott, EuZW (2001), p. 325 (329); Rauscher, NJW (2010), p. 2251 (2254); Jayme/Kohler, IPRax (1999), p. 401 (405) demands an “… Übertragung der in Buchst. b gefundenen Lösung”; Kropholler/von Hinden, in: Schack, Gedächtnisschrift für Alexander Lüderitz (2000), p. 401 (409). 128

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

117

pretation. Also the Court of Justice of the European Union did not follow this approach.134 The only satisfactory option is a legislative reform of Art 5 (1) Brussels I.135 A conceivable approach would be to introduce autonomous definitions of the place of performance for all types of contracts. Due to private autonomy and freedom of contract, the list of possible types of contracts is nearly unlimited. This renders such a solution virtually impossible. In order to enhance private enforcement of EU antitrust law, it would be sufficient to develop this approach for contracts which are relevant in cross-border antitrust law actions such as licensing agreements. 4. Declaration of Voidness of Anti-Competitive Agreements One of the parties to a contractual agreement may desire a declaration that the contractual relationship does not exist as it is infringing EU antitrust law. In Germany this can be achieved following the procedure of Section 256 of the German Code of Civil Procedure.136 The purpose of such declaration is legal certainty, as the nullity of a contractual provision that infringes EU antitrust law is directly effective.137 This scenario can also be of interest for litigation over antitrust damages if the declaration of voidness is a preliminary question for the claim, though in most cases it will be examined indirectly and jointly with the claim for damages. German procedural law requires a justified interest in a declaratory judgment.138 This is usually missing in cases in which the claimant can sue for performance.139 Despite the possibility of bringing an action for performance, an action for a declaratory judgment can be admissible to achieve procedural efficiency. This might be the case in damages litigation if proving the claim causes difficulties going beyond the disclosure which can be fought for with an action for a declaratory judgment.140 It has been shown here that the voidness of a contractual agreement due to antitrust law does not change the fact that Art 5 (1) Brussels I applies.141 Nevertheless, the wording of Art 5 (1) (a) Brussels I gives rise to uncertainties as interpretation is required to come to a broad understanding of the definition of matters relating to a 134

Court of Justice of the European Union, Judgment of 23 April 2009, Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst, Case C-533/07, ECR 2009 p. I-3327 paras. 48 et seq. 135 Coming to the same result Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 31; Leible, in: Bernreuther/Freitag/Leible/Sippel/Wanitzek, Festschrift für Ulrich Spellenberg (2010), p. 451 (453) who also criticises the fact that the Commission does not focus on this problem. 136 Becker-Eberhard, in: MüKo ZPO Volume 1, § 256 ZPO para. 1. 137 Art 1 Regulation 1/2003. 138 Section 256 (1) of the German Code of Civil Procedure. 139 Becker-Eberhard, in: MüKo ZPO Volume 1, § 256 ZPO para. 49. 140 Becker-Eberhard, in: MüKo ZPO Volume 1, § 256 ZPO para. 50. 141 Vide supra Part 4 D.II.2.c)aa).

118

Part 4: Analysis and Reform of the Jurisdictional Rules

contract. Legislative clarification can put an end to such uncertainty which obscures the predictability of the forum. A good solution would be to redraft Art 5 (1) (a) Brussels I in order to make sure that the jurisdiction over the contract covers actions for a declaration that a contract infringing antitrust law is null and void. “Given the fact that for the purposes of Art 5 (1) [Brussels I], a European definition of matters relating to a contract is required, the incorporation of Art 12 (1) (e) [Rome I] into an EU legal instrument is … reflecting the European concept of matters relating to contract.”142 The provision could therefore state: “A person domiciled in a Member State may, in another Member State, be sued in matters relating to a contract and its existence, in the courts of the place of performance of the obligation in question; the same court shall be competent for an action for a declaration that a contractual obligation is void”. 5. Damages Claim of a Contracting Party Another crucial question is whether the court that is competent for an action for a declaration that a contractual provision is void due to a conflict with antitrust law also has jurisdiction to hear a claim for damages brought by one of the contracting parties.143 a) Development towards Tortious Damages Claims The forum contractus has jurisdiction for actions for damages claimed by one of the contracting parties against the other if the latter is responsible for a breach of antitrust law. However, reviewing the relevant literature144, it should be noted that in most cases all actions for damages in private antitrust enforcement are categorised as being tortious with the consequence that only Art 5 (3) Brussels I applies.145 Considering that the Court of Justice of the European Union ruled that the character142

Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 30. See this problem at Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 31. 144 Brkan, 28 World Competition (2005), p. 479 (486 et seq.) does not even mention Art 5 (1) Brussels I in this context; Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 20 states that in “… any case, it is beyond question that that an EU antitrust damages action should be tortious in nature”; Idot, in: Basedow, Private Enforcement of EC Competition Law, p. 85 (86) is not clear but states that there are “… actions for tort damages following the cancellation of a contract”; Withers, JBL (2002), p. 250 (260) states that “[w]hile claims related to the purchase of goods or services at artificially inflated prices will invariably involve a contract of sale, it would be a misconstruction of the nature of such claims to suggest they are related to contract, within the meaning of Article 5(1) of the Regulation.”; the European Commission declares that “… defendants can either be sued in the courts of the state where they are domiciled or – at the choice of the claimant – in the courts of the state where the harmful event occurred”, see Green Paper on Damages actions, p. 10; see numerous further references at Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (22) footnote 30. 145 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (22 et seq.). 143

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

119

isation of a legal relationship as a contractual one takes precedence,146 this approach is wrong. Compensation for non-contractual damages, that is, damages arising from obligations not based on a contractual promise, is subject to the law of torts.147 Having shown that there are contractual elements even after a contract has been invalidated, such a development should not be followed.148 Even a void contract must be considered as being a contract in terms of Art 5 (1) Brussels I. Nevertheless, the characterisation of antitrust damages claims as tortious affects the claimants’ situation as it might result in a fragmentation of jurisdiction. It is desirable that one court is competent for a declaratory action and the damages claim be brought after it. This situation can be exemplified by the situation of two contracting parties, a producer and a distributor, having agreed about the purchase of goods, and that the latter has a prohibition to export these goods imposed on it.149 The producer can sue for performance which is obviously covered by Art 5 (1) Brussels I. A possible damages claim for the loss caused by the prohibition to export as a counter-claim brought by the defendant, the distributor, can be covered by Art 6 (3) Brussels I.150 This provision states that on a counter-claim arising from the same contract or facts on which the original claim was based, a person may also be sued in the court in which the original claim is pending. This provision substitutes Section 33 of the German Code of Civil Procedure.151 These requirements are fulfilled as the claim relates to the same distribution agreement which is alleged to distort competition. There is a factual connection between the producer’s claim for enforcement of the contract and the counter-claim for antitrust damages based on the alleged voidness under primary antitrust law of the same agreement.152 This is a consequence of the idea of factual connection which avoids the fragmentation of litigation.153 However, the situation is less clear when the distributor decides to bring an action for a declaration that the contract is void followed by a damages claim.154

146 Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 18; Court of Justice of the European Union, Judgment of 27 October 1998, Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002, Case C-51/97, ECR 1998 p. I-6511 para. 22; Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 36. 147 Wagner, in: MüKo BGB Volume 5, Vorbemerkungen zu §§ 823 et seq. BGB para. 1. 148 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (23). 149 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 26. 150 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 31 et seq. 151 Heinrich, in: Musielak, ZPO, § 33 ZPO para. 30 with further references. 152 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 31. 153 Federal Court of Justice, Judgment of 20 May 1985, NJW (1981), p. 2642 (2643). 154 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 32.

120

Part 4: Analysis and Reform of the Jurisdictional Rules

b) Antitrust Damages Claim of a Contracting Party If the distributor brings a claim aiming at a declaration of voidness of the distribution contract under Art 5 (1) (b) Brussels I at the place of performance and a subsequent damages claim to achieve compensation for the harm suffered by the illegal prohibition to export goods, establishing jurisdiction for the second claim is difficult.155 Pursuant to the convincing view, damages claims having their origin in a contractual relationship, even after it has been invalidated, are contractual and therefore covered by Art 5 (1) Brussels I. As a consequence both claims of the distributor are dealt with by the same court, namely the one for the place of performance. This is the place in a Member State where the services were provided or should have been provided. However, defining all antitrust damages claims as tortious might result in an application of Art 5 (3) Brussels I. aa) Art 5 (3) Brussels I The court in the forum delicti commissi which is competent pursuant to Art 5 (3) Brussels I is not able to decide aspects which are not tortious. This does not result from the lex fori or lex causae, but from an autonomous interpretation of the Brussels I Regulation.156 The Court of Justice of the European Union ruled that special jurisdictions constitute derogations from the venue of the defendant’s domicile and as such must be interpreted in a restrictive manner. Therefore, a court which has jurisdiction “… over an action in so far as it is based on tort or delict does not have jurisdiction over that action in so far as it is not so based”.157 Admitting that difficulties arise from different aspects of one dispute being adjudicated upon by several courts, the Court of Justice of the European Union defended its position by stating that claimants are always entitled to bring the entire action before the courts of the domicile of the defendant.158 Also Art 28 Brussels I159 should balance the fragmentation of jurisdiction by allowing the court first seised, under certain circum155

Following the convincing view that both claims are contractual, there is no difficulty as the place of performance is the right forum for both claims. However, see the problem at Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 32. 156 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 79 with further references; Staudinger/Steinrötter, JA (2012), p. 241 (246) disagrees and states that both claims can be dealt with by Art 5 (1) Brussels I; Mansel, IPRax (1989), p. 84 (85) also thinks that the scope of Art 5 (1) and (3) Brussels I should be interpreted extensively. 157 Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 19. 158 Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 20. 159 The Court of Justice of the European Union referred to Art 22 Brussels Convention as the decision was handed down before the Brussels I Regulation entered into force.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

121

stances, to hear the entire case provided there is a connection between the claims.160 This position of the Court of Justice of the European Union that claimants cannot bring contractual claims in the forum delicti commissi has been accepted.161 bb) Factual Connection of the Claims However, practice shows that national courts have decided on contractual claims that are connected to the non-contractual ones in the forum for matters relating to tort,162 notably arguing with higher efficiency of civil procedural law if claims are connected factually163. And indeed, the reasons the Court of Justice of the European Union presented against a factual connection164 are questionable. The statement that a claimant is always entitled to bring his action in its entirety under Art 2 (1) Brussels I is not correct. In cases governed by Art 22 Brussels I and in those in which the parties agreed that the courts of a Member State are to have jurisdiction according to Art 23 Brussels I, the general rule of Art 2 (1) Brussels I does not apply.165 Apart from that, the prospect of double litigation and irreconcilable judgments brings disadvantages for the court system in general as well as the parties.166 The decisive question is whether this line of reasoning can be transferred to the reverse situation: allowing both types of claims to be brought in the forum contractus.167 Basically, due to the comparability of the situations, the outcome in this case should be the same. However, there is an aspect which argues even more for a broad jurisdiction under Art 5 (1) Brussels I than for the one under Art 5 (3) Brussels I. The contractual relationship between the parties is the basis of the relationship168 and therefore justifies a finding of jurisdiction for all related claims.169 In the above example the distributor and the producer agreed on a distribution agreement from which all claims arise. The tortious claim for antitrust damages is closely 160 Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 20. 161 Patzina, in: MüKo ZPO Volume 1, § 32 ZPO para. 19. 162 Regional Court Cologne, Judgment of 23 November 1977, NJW (1978), p. 329. 163 Regional Court Cologne, Judgment of 23 November 1977, NJW (1978), p. 329 (330); see also Gottwald, IPRax (1989), p. 272 (273). 164 See Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 20. 165 Gottwald, IPRax (1989), p. 272 (273). 166 Geimer, NJW (1988), p. 3089 (3090). 167 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 79. 168 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 79. 169 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 79; see with another argumentation Mansel, IPRax (1989), p. 84 (86); Staudinger, ZEuP (2004), p. 767 (777 et seq., 779).

122

Part 4: Analysis and Reform of the Jurisdictional Rules

related to the contractual claim and it has to be determined by the court only if the primary claim (for a declaratory judgment) is not dismissed, which is the case if the court is convinced of the nullity of the contractual provision.170 This illustrates that the contractual claim is more important for the characterisation of the relationship between the parties, even if one considers the damages claim as tortious. Such a significant role of the contractual element is supported by Art 4 (3) Rome II stating that where the circumstances of the case indicate that the tort is “manifestly more closely connected” with a State other than that addressed in Art 4 (1) or (2) Rome II, the law of that other country shall apply.171 “A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort in question.”172 This illustrates that the Rome II Regulation ties tortious claims to an existing contractual relation. cc) Suggestions for Legal Reform There are good reasons to support the view that claimants should have the opportunity to bring a tortious claim for damages under Art 5 (1) Brussels I together with a contractual claim seeking a declaration concerning the nullity of the contract. Otherwise, there might an unsatisfactory outcome that two courts have jurisdiction for claims which should be heard together. In particular, in antitrust cases, it seems that jurisdiction for both claims in the forum contractus is justified because the contract shapes the whole dispute.173 These courts are best placed to understand the economical and factual context and implications as regards legal proceedings. Art 5 (1) Brussels I can determine jurisdiction, since matters relating to contract “channel” the aspects of the entire dispute.174 However, the situation de lege lata does not give enough hints to cover noncontractual EU antitrust damages claims by Art 5 (1) Brussels I. The legislator has to take measures to stop this inconsistency. The Brussels I Regulation already recognises in Art 6 (4) Brussels I that jurisdiction in matters relating to a contract in the case of a factual connection. This supports the suggestion to introduce such a jurisdictional rule with regard to Art 5 Brussels I. It should be recalled that the controversy whether there is a need to establish a jurisdiction of factual connection is superfluous if contractual damages claims are characterised as such.

170

p. 32. 171

See Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims,

Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 79. See Art 4 (3) (2) Rome II. 173 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 79. 174 See Opinion of Mr Advocate General Darmon, delivered on 15 June 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 29. 172

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

123

6. Ideas for Reform of Art 5 (1) Brussels I175 The application of Art 5 (1) Brussels I is advantageous to claimants. Its purpose is to facilitate proceedings by the link between the court and the place of performance.176 That court is significantly better placed to hear an action than the courts of the place where the defendant is domiciled. Art 5 (1) Brussels I allows claimants to choose between forums to benefit from differences in substantive laws. For example, in the case of an anti-competitive sales contract, if the goods were delivered at the claimant’s domicile,177 the latter has the opportunity to bring the action in his home forum. This illustrates that, consistently with the basic idea for legal reform in this thesis – to allow for limited Forum Shopping through jurisdictional rules – the availability of Art 5 (1) Brussels I is of great benefit for claimants. The positive changes brought by Art 5 (1) (b) Brussels I178 benefit claimants. However, there are still scenarios in which jurisdiction with regard to contract-based antitrust claims is determined by Art 5 (1) (a) Brussels I. Considering jurisdiction is hampered as the determination of the place of performance is made by reference to the law applicable under the conflict-of-law rules of the court seised. This is an unsatisfactory outcome as several places of performance are possible. The legislator should reform Art 5 (1) Brussels I.179 A conceivable approach would be to introduce autonomous definitions of the place of performance for all types of contracts, or at least for those which are relevant in cross-border antitrust law actions such as licensing agreements. Additionally, claimants should have the opportunity to bring a tortious claim for damages under Art 5 (1) Brussels I, together with a contractual claim seeking a declaration concerning the nullity of the contract. The legislator should explicitly introduce a broad jurisdiction of the courts of the place of performance of the obligation in question for matters relating to a contract and tort.

III. Disputes Arising out of the Operations of a Branch or Agency Article 5 Brussels I A person domiciled in a Member State may, in another Member State, be sued: 175

Vide supra Part 4 D.II. with references. Court of Justice of the European Union, Judgment of 6 October 1976, Industrie Tessili Italiana Como v Dunlop AG, Case 12-76 ECR 1976 p. 1473 para. 13. 177 See Art 5 (1) (b) Brussels I. 178 Vide supra Part 4 D.II.3.b)bb). 179 Coming to the same result Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 31; Leible, in: Bernreuther/Freitag/Leible/Sippel/Wanitzek, Festschrift für Ulrich Spellenberg (2010), p. 451 (453) who also criticises the fact that the Commission does not focus on this problem. 176

124

Part 4: Analysis and Reform of the Jurisdictional Rules

5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated.

Art 5 (5) Brussels I gives claimants the opportunity to sue an undertaking or the owner of a branch in the courts of the place of the permanent branch. This provision is virtually only relevant in cases in which the owner of the branch is covered by a general jurisdiction of a court of a Member State other than the one where the branch or agency is situated. The concept of branch implies a place of business with a certain permanency and its own management but still legally linked with the parent body.180 Subsidiaries on the contrary are not covered by Art 5 (5) Brussels I due to their independency.181 As a branch office is not a separate legal entity, it cannot be sued as a defendant.182 Art 5 (5) Brussels I benefits claimants as it is one more exception from “actor sequitur forum rei”. Indeed, it cannot be accepted that a customer who buys a product in England from a local branch of a German company has to bring a damages claim in Germany. It will usually be impossible to look through the corporate structure. Art 5 (5) Brussels I can also play a role in transnational antitrust damages litigation.183 For example, it can be the basis for an action in England against a German manufacturing company which is involved in an international cartel and sells products at artificially fixed prices in England through its local branch.184 Claimants can base contractual and tortious damages claims on Art 5 (5) Brussels I185 which is a major advantage considering the difficulties that arise under Art 5 (1) Brussels I in this context.186 The decisive precondition is the dependency of the branch or agency.187 In cross-border antitrust cases which have their origin in anti-competitive agreements concluded by international cartels or in an abuse of a dominant position, a branch or agency is normally bound by instructions of the parent company. Consequently, Art 5 (5) Brussels I can play a role in cross-border antitrust cases and contribute to a wider choice of forums.

180 Court of Justice of the European Union, Judgment of 22 November 1978, Somafer SA v Saar-Ferngas AG, Case 33/78, ECR 1978 p. 2183 para. 12. 181 Stadler, in: Musielak, ZPO, Art 5 VO (EG) 44/2001 para. 28; Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 107 with further references. 182 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 48. 183 Schlosser, EU-Zivilprozessrecht, Art 5 EuGVVO para. 24. 184 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 48. 185 Schlosser, EU-Zivilprozessrecht, Art 5 EuGVVO para. 24; Nagel/Gottwald, Internationales Zivilprozessrecht, § 3 para. 78. 186 Vide supra Part 4 D.II.5.b). 187 Court of Justice of the European Union, Judgment of 22 November 1978, Somafer SA v Saar-Ferngas AG, Case 33/78, ECR 1978 p. 2183 para. 12.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

125

IV. A Number of Defendants Article 6 Brussels I A person domiciled in a Member State may also be sued: 1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

1. Art 6 Brussels I and Forum Shopping Litigation over damages claims arising from transnational cartels will involve suits against defendants from several States.188 Art 6 (1) Brussels I determines jurisdiction for the “joinder of parties” and states that a person may be sued where he is one of a number of defendants, in the courts of the place where any one of them is domiciled. With regard to cross-border antitrust damages claims, this means that a claimant can sue all members of an international cartel in German courts if one of them has its seat in Germany. a) Benefits to Claimants The most significant benefit for claimants is not only to sue several cartelists together but also the choice that is granted with regard to the forum. For example, in the case of a pan-European cartel including German, English and French producers who fixed prices, the distributor that was harmed can decide whether to bring his claim against all defendants in Germany, England or in France.189 He may decide to bring his claim in England to benefit from the fact that evidence favourable to the claimant might appear during disclosure proceedings.190 The distributor might also decide to save costs by launching the action in Germany191 or to benefit from the lack of requirement of fault in France192. Cartels will normally even involve members from all European countries. Otherwise they risk that competitors undermine the cartel by taking competitive prices.193 In such a case, cartel damages claims can be brought under Art 6 Brussels I in any European forum which would allow the widest choice between domestic regimes. This is further strengthened by the fact that the

188

Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (42). Fawcett, 44 ICLQ (1995), p. 744 (749). 190 Woods, 16 Loy Consumer L Rev (2003 – 2004), p. 431 (442). 191 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63). 192 Vide supra Part 2 B.I.2.a). 193 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 74. 189

126

Part 4: Analysis and Reform of the Jurisdictional Rules

“anchor-defendant”194 does not have to be a main or even significant part of the cartel.195 Other benefits are the facilitation of proof and the possibility of opting for the lex fori by Art 6 (3) (b) Rome II196 entailing another strategic advance for claimants. These advantages illustrate that Art 6 (1) Brussels I is fully consistent with the amendments to the Brussels I Regulation proposed in this thesis. b) Potential for Abuse Apart from general criticisms of Forum Shopping,197 there are concerns that Art 6 (1) Brussels I may be invoked against co-defendants even when the action against the “anchor-defendant” is inadmissible.198 A claimant brought an action in Austria against an Austrian domiciled defendant and wished to join a German domiciled bank which had stood security for a certain sum.199 The Court of Justice of the European Union held that Art 6 (1) Brussels I “… may be relied on in the context of an action brought in a Member State against a defendant domiciled in that State and a co-defendant domiciled in another Member State even when that action is regarded under a national provision as inadmissible from the time it is brought in relation to the first defendant”.200 Consequently, the fact that judicial proceedings could not be brought against the “anchor-defendant” did not constitute a bar to joining the German bank to the proceedings abroad.201 It is rather doubtful whether these claims “… are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”.202 However, such a case is an exception and should not be seen as rule, as there are several factors and national characteristics that played a role. Nevertheless, introducing into Art 6 (1) Brussels I a requirement that “… the claim against the anchor defendant

194 The one who is domiciled in the Member State in which the action is brought, Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (46). 195 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 71 with further references. 196 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 73. 197 See for example Fawcett, 35 N Ir Legal Q (1984), p. 142 (144 et seq.); Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 172 et seq.; Unberath/ Cziupka, in: Rauscher, EuZPR/EuIPR, Art 6 Rom II-VO paras. 72 et seq.; Brkan, 28 World Competition (2005), p. 479 (487); Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 48, 49, 51, 53. 198 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (46). 199 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (46). 200 Court of Justice of the European Union, Judgment of 13 July 2006, Reisch Montage AG v Kiesel Baumaschinen Handels GmbH, Case C-103/05, ECR 2006 p. I-6827 para. 31. 201 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (46). 202 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (47) with further references.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

127

should not be manifestly inadmissible or unfounded”203 would be a proper way capable of avoiding abusive Forum Shopping but still giving the claimant the possibility choosing between different forums. 2. Close Connection In a similar way to the problems presented in connection with Art 5 (1) Brussels I, an important question is whether a national court can decide on both contractual and tortious aspects of the damages claim in one proceeding.204 In connection with Art 6 (1) Brussels I and damages claims involving several defendants domiciled in different jurisdictions, this problem is of much greater practical relevance. If a claimant takes action against the whole of a cartel it is more likely that contractual and non-contractual damages claims would be litigated. This can be relevant in a case in which a purchaser of goods, with prices manipulated by a cartel, wants to sue the subsidiary from which he bought the products and to join the parent company which is a member of the cartel and agreed on the excessive price adjustments.205 The claim for damages against the subsidiary is contractual whereas there is no contractual relationship between the purchaser and the parent company and the claim is exclusively based upon liability in tort.206 The wording of Art 6 (1) Brussels I is only of little help. It just states that the claims have to be “… so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”. There is no distinct indication how contractual and tortious claims are dealt with. From the former point of view of the Court of Justice of the European Union “… two claims in one action for compensation, directed against different defendants and based in one instance on contractual liability and in the other on liability in tort or delict cannot be regarded as connected”.207 However, quite recently the Court of Justice of the European Union stated concerning Art 6 (1) Brussels I that it “… is not apparent from the wording … that the conditions laid down for application of that provision include a requirement that the actions brought against dif-

203

Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (53). Vide supra Part 4 D.II.5.b). 205 See the example at Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (47) who – referring to the Provimi case – also agrees with the questionable opinion that both claims are tortious as “… despite the contractual nexus, the claimant was not claiming for breach of contract as such but was complaining that the price that he had paid was too high because of the existence of the cartel”. 206 Basedow, in: Basedow, Private Enforcement of EC Competition Law, p. 229 (231 et seq.). 207 Court of Justice of the European Union, Judgment of 27 October 1998, Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002, Case C-51/97, ECR 1998 p. I-6511 para. 50. 204

128

Part 4: Analysis and Reform of the Jurisdictional Rules

ferent defendants should have identical legal bases”.208 According, it must be ascertained whether the connection between the claims is sufficient that it is necessary to determine them together in order to avoid the risk of irreconcilable judgments.209 Indeed, different views of national courts are a reason for hearing EU antitrust law claims together in order to avoid irreconcilable judgments210 and therefore a claimant could sue several defendants based on contract and on tort respectively211. This is a satisfactory outcome as it facilitates actions for claimants in cross-border antitrust cases. 3. Defendants Domiciled Outside the European Union Art 6 (1) Brussels I requires that the defendant has to be domiciled in the European Union. Third country defendants are not covered and consequently subject to the law of their country, Art 4 (1) Brussels I. If the respective national regime does not contain a provision like Art 6 Brussels I,212 third country defendants would be privileged as they could not be sued in the jurisdiction of the other cartel members.213 This is wrong in terms of legal policy, to support the principle of economic efficiency in proceedings, avoid irreconcilable judgments and benefit claimants.214 Disputes raising antitrust law issues often include non-EU parties. Especially “… private actions pursued against anti-competitive practices often involve companies located in different countries, business practices of global reach, procedures in more than one State and evidentiary material spread across multiple jurisdictions”.215 In order to make private antitrust enforcement more effective, it is important for claimants that the Brussels I Regulation gives them the possibility of suing third State defendants in the European Union. In particular, Art 6 (1) Brussels I and its outstanding significance and benefit for private antitrust enforcement should be available to take action against non-EU parties which are members of cartels. This would be implemented by extending the scope of the Brussels I Regulation. It is therefore 208 Court of Justice of the European Union, Judgment of 11 October 2007, Freeport plc v Olle Arnoldsson, Case C-98/06, ECR 2007 p. I-8319 para. 38. 209 Court of Justice of the European Union, Judgment of 11 October 2007, Freeport plc v Olle Arnoldsson, Case C-98/06, ECR 2007 p. I-8319 para. 39; Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 13; Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (47). 210 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 52. 211 Federal Court of Justice, Decision of 30 November 2009, EuZW (2010), p. 959 paras. 8 et seq. 212 For example, the German Code of Civil Procedure does not contain this jurisdiction. 213 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 76. 214 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 77. 215 Basedow/Francq/Idot, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 1 (1 et seq.).

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

129

incomprehensibe that the proposed reform of the European Commission216 does not address this issue even though the circumstance that the defendant is domiciled in a third State should no longer entail the application of national jurisdictional law.217 Unlike all other jurisdictions, the proposed Art 6 (1) Brussels I explicitly adheres to the requirement of domicile in a Member State.218 4. Concluding Remarks Art 6 (1) Brussels I plays an important role in cross-border antitrust damages claims. Such a wide base of jurisdiction, which allows for Forum Shopping, is a promising and valuable approach to achieve compensation for antitrust victims. The possibility of suing all cartelists in one place not only facilitates proceedings and reduces costs, it also provides the opportunity to benefit from different national provisions by opting for the lex fori.219 In addition, the fact that claimants can sue several defendants based on both contract and tort220 is a benefit. Nevertheless, introducing into Art 6 (1) Brussels I a requirement that “… the claim against the anchor defendant should not be manifestly inadmissible or unfounded”221 would be an appropriate way in which abuse by Forum Shopping might be avoided, but still give the claimant the possibility of choosing between different forums. Additionally, Art 6 (1) Brussels I also has to be a basis for claims against defendants domiciled outside the European Union.222

V. Matters Relating to a Contract Concluded by a Consumer Article 15 Brussels I 1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5, if: (a) it is a contract for the sale of goods on instalment credit terms; or

216

Vide supra Part 4 B.II. Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 78. 218 Proposal for Recast, p. 25. 219 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 73. 220 Federal Court of Justice, Decision of 30 November 2009, EuZW (2010), p. 959 paras. 8 et seq. 221 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (53). 222 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 78. 217

130

Part 4: Analysis and Reform of the Jurisdictional Rules

(b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or (c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities. 2. Where a consumer enters into a contract with a party who is not domiciled in the Member State but has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State. Article 16 Brussels I 1. A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled. Article 17 Brussels I The provisions of this Section may be departed from only by an agreement: 1. which is entered into after the dispute has arisen; or 2. which allows the consumer to bring proceedings in courts other than those indicated in this Section; or 3. which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State, and which confers jurisdiction on the courts of that Member State, provided that such an agreement is not contrary to the law of that Member State.

1. Ratio and Role of Consumer Protection in Antitrust-Based Litigation Encouraging the active participation of citizens in the good functioning of markets helps to protect efficient competition.223 Consistently with the basic objective of this thesis, consumer protection in the international context can be achieved by rules on jurisdiction.224 Unfortunately, German rules on jurisdiction do not contain special provisions to protect consumers but treat them the same as other parties. Prima facie, Arts 15 et seq. Brussels I imply that consumers find an intensified protection at EU level.225

223

Green Paper on Consumer Collective Redress, para. 1. See Lüderitz, in: Jayme/Kegel/Lutter, Ius inter nationes (1983), p. 147 (148 et seq.); Schack, Internationales Zivilverfahrensrecht, § 8 para. 314. 225 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 226. 224

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

131

a) Application to Antitrust Damages Claims There is no reason not to apply Arts 15 et seq. Brussels I to antitrust-based disputes. A consumer who has been infringed by an anti-competitive agreement can base his damages claim on these provisions. In the event of an horizontal price-fixing agreement, consumers are usually affected by the purchase price increase. Assuming that purchasers and wholesale traders pass on the artificially increased price to their customers,226 the consumer is probably the only one who is harmed. b) Betterment of Consumers Art 16 (1) Brussels I allows consumers to sue those infringing the law in the courts of the place where the consumer is domiciled. It has been shown that such a claimant’s venue is a significant benefit for the party because of the familiarity with the legal system, language and other soft-factors.227 It should also be recalled that costs are much lower if an antitrust damages claim is brought in the home forum.228 Art 17 Brussels I makes sure that a non-consumer party to a consumer contract cannot rely on a jurisdiction agreement, deviating from the legal jurisdictions, unless strict requirements are met. The ratio behind such a restrictive rule is to protect the consumer who will usually be averse to litigating in a foreign forum where he incurs higher costs and would have to manage transnational litigation risks.229 c) Protection of Defendants versus Effective Legal Protection These benefits awarded to consumers override the protection of defendants.230 The latter and the victims’ right to effective legal protection are in conflict with each other.231 By awarding benefits to consumers like a claimants’ venue the legislator shows awareness of their special situation, resulting in a need of stronger protection. Consumers usually lack experience in litigating, while undertakings are more experienced.232 Further, they can impress national judges with positive judgments from 226

Vide supra Part 2 B.I.4. Lindacher, Internationales Wettbewerbsverfahrensrecht, § 26 para. 3; Federal Court of Justice, Decision of 14 June 1965, BGHZ 44, 46 (50). 228 Vide supra Part 2 D.II. 229 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 62 with further references. 230 Nagel/Gottwald, Internationales Zivilprozessrecht, § 3 para. 28; Federal Court of Justice, Decision of 27 October 1983, BGHZ 88, 331 (335); Staudinger/Steinrötter, JA (2012), p. 241 (245); Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 16 VO EG Nr. 44/2001 para. 1. 231 Pfeiffer, in: Schmidt, 50 Jahre Bundesgerichtshof – Festgabe aus der Wissenschaft (2000), p. 617 (620 et seq.). 232 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 65. 227

132

Part 4: Analysis and Reform of the Jurisdictional Rules

parallel proceedings. Other disadvantages may arise from agreements on jurisdiction as consumers normally cannot predict the risks.233 In addition, in cross-border litigation over damages claims, there are aspects affecting consumers beyond such aspects of domestic procedural law.234 A crossborder action results in higher costs.235 A lawyer usually lacks knowledge of the prevailing legal rules abroad and will therefore have to consult a foreign colleague in order to claim in an alien forum.236 These problems are even exacerbated if, after having examined the legal situation in the other State, the lawyer comes to the conclusion that a damages claim is not promising. Whereas coming to such conclusion is relatively easy in the lawyer’s jurisdiction where he has expertise, it will usually take more research in a transnational action. Costs also increase as documents and papers have to be translated, an interpreter is required and legal representation is much more complex.237 The foreign language in the alien forum might mean that the difficulty of bringing forward arguments is aggravated. Apart from that, many consumers feel intimidated by court proceedings in general and they have even more resentment against foreign legal systems.238 Even the mere distance between their residence and the location of the court might scare consumers.239 While the local jurisdiction of German procedural law allocates jurisdiction to the Regional Court Kiel or in the worst case scenario to the one of Munich, the Brussels I Regulation can commit the German consumer to bring his action in Portugal. This illustrates how beneficial a claimants’ venue is to the consumer. 2. Addressees of Privileges a) Personal Scope: Consumers The application of Art 15 (1) Brussels I requires a contract concluded by a consumer for a purpose outside his trade or profession. This definition combines the

233 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 65 with further references. 234 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 66. 235 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63 et seq.). 236 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 66. 237 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 66. 238 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 66. 239 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 66.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

133

elements consumer, consumer contract and purpose of the contract240 and requires an autonomous definition241. To determine whether a person is a consumer, “… reference must be made to the position of the person concerned in a particular contract … and not to the subjective situation of the person concerned”.242 As a result, one person may be regarded as a consumer in relation to certain transactions and as a professional in relation to others.243 The wording of Art 15 (1) Brussels I is of no help to understand whether the provision is limited to natural persons or whether legal persons can also be protected under given circumstances. The prospect of including small- and medium-sized undertakings highlights the relevance of this question. Recital 7 Rome I states that the substantive scope of the Rome I Regulation should be consistent with the Brussels I and Rome II Regulation. This makes it possible to benefit from an interpretation of the relevant conflict-of-laws rules.244 In contrast with the Brussels I Regulation, Art 6 (1) Rome I requires “… a contract concluded by a natural person (emphasis added) for a purpose which can be regarded as being outside his trade or profession (the consumer) with another person acting in the exercise of his trade or profession (the professional)”. This is evidence of a narrower understanding of “consumer” for choice-of-law purposes in the Rome I Regulation than for jurisdictional purposes in the Brussels I Regulation. One might conclude that if the legislator explicitly demands a natural person in Art 6 (1) Rome I Regulation, the lack of such requirement in Art 15 (1) Brussels I allows also legal persons to benefit from the provision.245 However, despite the wording, the Court of Justice of the European Union came to the opposite conclusion. It decided that rules of jurisdiction which derogate from “actor sequitur forum rei” must be strictly interpreted and cannot give rise to an interpretation going beyond the cases envisaged.246 This interpretation applies a 240 Kleinknecht, Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, p. 81. 241 Court of Justice of the European Union, Judgment of 11 July 2002, Rudolf Gabriel, Case C-96/00, ECR 2002 p. I-6367 para. 37. 242 Court of Justice of the European Union, Judgment of 3 July 1997, Francesco Benincasa v Dentalkit Srl, Case C-269/95, ECR 1997 p. I-3767 para. 16. 243 Court of Justice of the European Union, Judgment of 3 July 1997, Francesco Benincasa v Dentalkit Srl, Case C-269/95, ECR 1997 p. I-3767 para. 16. 244 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 15 EuGVO para. 4. 245 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 15 EuGVO para. 4. 246 Court of Justice of the European Union, Judgment of 20 January 2005, Johann Gruber v Bay Wa AG, Case C-464/01, ECR 2005 p. I-439 para. 32; Court of Justice of the European Union, Judgment of 21 June 1978, Bertrand v Paul Ott KG, Case 150/77, ECR 1978 p. 1431 para. 17; Court of Justice of the European Union, Judgment of 19 January 1993, Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH, Case C-89/91, ECR 1993 p. I-139 paras. 14 et seq.; Court of Justice of the European Union, Judgment of 3 July 1997, Francesco Benincasa v Dentalkit Srl, Case C-269/95, ECR 1997 p. I-3767 para. 13; Court of Justice of the European Union, Judgment of 27 April

134

Part 4: Analysis and Reform of the Jurisdictional Rules

fortiori to rules on jurisdiction which allow a consumer to sue in the courts of the place where he is domiciled.247 The Court of Justice of the European Union therefore held that only contracts concluded outside of any professional activity, for the purpose of satisfying an individual’s needs, are governed by special rules of consumer protection248 and only “final consumers” benefit from it249. Accordingly, small- and medium-sized undertakings are not protected and cannot sue their suppliers under Arts 15 et seq. Brussels I. b) Third Parties on Behalf of Consumers Having shown that the provisions analysed only allocate jurisdiction in the case of private end consumers claiming damages, the subsequent and much more relevant question is whether the outcome is the same if the action is brought by a class or association on behalf of consumers: namely whether Art 16 (1) Brussels I would be the basis for jurisdiction for consumer collective actions. Arts 15 et seq. Brussels I allocate jurisdiction with regard to class actions brought by the members of the claimant’s class at the consumers’ Home State.250 A class action allows individuals to sue as representatives of a larger class of unidentified individuals who are merely described and who share common grievances with the representative.251 Indeed, if all claimants are consumers, there is no reason why the special provisions protecting consumers should not apply.

1999, Hans-Hermann Mietz v Intership Yachting Sneek BV, Case C-99/96, ECR 1999 p. I-2277 para. 27. 247 Court of Justice of the European Union, Judgment of 19 January 1993, Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH, Case C-89/91, ECR 1993 p. I-139 para. 17; Court of Justice of the European Union, Judgment of 3 July 1997, Francesco Benincasa v Dentalkit Srl, Case C-269/95, ECR 1997 p. I-3767 para. 14. 248 Court of Justice of the European Union, Judgment of 20 January 2005, Johann Gruber v Bay Wa AG, Case C-464/01, ECR 2005 p. I-439 para. 36. 249 Court of Justice of the European Union, Judgment of 20 January 2005, Johann Gruber v Bay Wa AG, Case C-464/01, ECR 2005 p. I-439 para. 35; Court of Justice of the European Union, Judgment of 21 June 1978, Bertrand v Paul Ott KG, Case 150/77, ECR 1978 p. 1431 para. 21; Court of Justice of the European Union, Judgment of 19 January 1993, Shearson Lehmann Hutton Inc v TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH, Case C-89/91, ECR 1993 p. I-139 para. 22; Court of Justice of the European Union, Judgment of 3 July 1997, Francesco Benincasa v Dentalkit Srl, Case C-269/95, ECR 1997 p. I-3767 para. 15. 250 Danov, JPIL (2010), p. 359 (375). 251 Mulheron, 15 Colum J Eur L (2008 – 2009), p. 409 (412); see also Hensler, 11 Duke J Comp & Int’l L (2001), p. 179 (182).

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

135

aa) Consumer Associations More problems arise when determining jurisdiction in actions brought by a consumer association on behalf of consumers. In this case the association is the claimant and not a consumer. The Court of Justice of the European Union decided that a legal person which acts as assignee of the rights of a private final consumer cannot be regarded as a consumer and cannot invoke the jurisdictional rules with the objective of protecting consumers.252 An assignee therefore cannot base a damages claim on Arts 15 et seq. Brussels I. This interpretation is convincing with regard to wording and ratio of Art 15 (1) Brussels I. There are voices demanding the outcome must be a different if the action is brought by a representative body on behalf of identified consumers but not on behalf of the entire class of consumers for antitrust damages resulting from an EU antitrust law infringement.253 Indeed, the distinction that an action on behalf of identified or identifiable consumers should be covered by Arts 15 et seq. Brussels I is convincing254 as it does not seem to matter whether the consumers are represented by a consumer association or a class action lawyer. However, this distinction is not certain and has not been expressly accepted by the Court of Justice of the European Union. bb) Consequence for Consumers From the consumers’ point of view the fact that representative bodies cannot invoke Arts 15 et seq. Brussels I is a frustrating outcome. It should be recalled that allowing for collective actions has the clear potential to improve the victims’ situation and boost private antitrust enforcement. If consumers must litigate by themselves, excessive costs make it uneconomic to take action. This is especially relevant with regard to court, lawyer and expert fees which will usually exceed the potentially achieved compensation.255 It is therefore incomprehensible why consumer representatives acting to protect the interests of consumers are not given the same privileges. 3. Objective Scope of the Privileges In a similar way to that discussed in the context of Arts 5256 and 6257 Brussels I, the application of consumer-protecting provisions to claims for tortious damages is important for claimants. One could argue that Art 16 (1) Brussels I applies to a 252 Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 33. 253 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 58. 254 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 58. 255 Vide supra Part 2 C.II.3. with references. 256 Vide supra Part 4 D.II.5.b). 257 Vide supra Part 4 D.IV.2.

136

Part 4: Analysis and Reform of the Jurisdictional Rules

contractual damages claim but not to a closely related tortious claim or a claim based on unjust enrichment. Such a result could be explained looking at the same wording “matters relating to a contract” in Arts 15 Brussels I and Art 5 (1) Brussels I. This suggests reaching the above mentioned results by analogy.258 However, it is quite clear that Art 16 (1) Brussels I does not award special jurisdiction with regard to a purely tortious claim. It should be recalled that in the case of illegal price-fixing agreements, the consumer can be the victim to anti-competitive agreements without having a contractual relationship to one of the cartelists. One fails to see why Arts 15 et seq. Brussels I should not benefit consumers in this situation. The downside of applying Arts 2 and 5 Brussels I to these cases has to be remedied by the legislator. 4. Reform Proposals to Strengthen the Consumers’ Position Arts 15 et seq. Brussels I improve the consumers’ situation. The possibility of claiming damages in courts of the place where they are domiciled facilitates litigation not only in antitrust law cases. It is consistent with the basic ideas for legal reform in this thesis to establish a limited Forum Shopping regime through jurisdictional rules and to assist victims by giving them the possibility of suing in their Home State in narrowly limited circumstances. Nevertheless, consumers do not take an active part in antitrust damages litigation and therefore the benefits are only of more or less theoretical significance. Damage caused by anti-competitive conduct is often passed down the supply chain259 to the end consumers who do not bring an action for damages. Despite being granted a claimants’ venue to facilitate proceedings and a wider choice of forums which enable strategic behaviour through Forum Shopping, consumers currently remain uncompensated on most occasions.260 a) Consumer Collective Redress Mechanisms A central element of a reform of the system of damages claims to compensate antitrust infringements should include collective action mechanisms. Their existence is a decisive aspect when it comes to encouraging consumers to claim compensation for anti-competitive conduct. aa) Home Venue for Consumer Associations The fact that consumer associations and similar bodies cannot base their claim on Art 16 (1) Brussels I destroys the benefits of this provision in antitrust law cases. 258 See Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 55 with an in-depth analysis of the problem; vide supra Part 4 D.II.5.b). 259 See Green Paper on Damages actions, p. 7. 260 White Paper on Damages actions, p. 4.

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

137

Consumers cannot achieve compensation unless they are represented by a consumer association or organised in a class. It should be made sure that Art 16 Brussels I also privileges associations which act on behalf of consumers that have been harmed by antitrust conduct. The legislator should amend Art 16 (1) Brussels I to that effect that: “A consumer, an association acting on behalf of the consumers or a class representing consumers may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts of the place where the consumer is domiciled”. The possibility of saving costs and having the chance to specialise on the home jurisdiction would be a great incentive for associations to enforce consumers’ rights. bb) Permanent Availability of Collective Redress Mechanisms Disadvantages of several collective redress mechanisms, traditions of civil jurisdictions and high adaption costs are clear reasons against harmonisation.261 Still, the availability of collective redress mechanisms is of such an overriding significance for victims with only a small degree of harm that consumers should be given the possibility of using collective action mechanisms. Granting this opportunity on a private international law basis through the Brussels I Regulation allows consumers the benefit of the advantages discussed above262 for consumers throughout the European Union without having the downsides of a fundamental change of the system263. A way to let consumers benefit from the availability of collective redress mechanisms in certain Member States is to extend the choice of forums to those jurisdictions which provide for such tools. It is advisable not only to refer to representative actions, but also to other collective actions, especially opt-in and opt-out class actions. The Brussels I Regulation should be amended and state that: “Consumer associations, bringing representative action for antitrust damages claims, and classes, acting on behalf of consumers who have been harmed, can initiate proceedings in those States which grant the procedural and substantive prerequisites”. The Commission should therefore draft a list of all regimes with adequate mechanisms of class and representative actions. b) Tortious Damages Claims Art 16 (1) Brussels I should also be amended in order to provide a basis for all claims brought by a consumer, an association on behalf of consumers, or consumers organised in a class. This should not only include tortious claims which are closely related to contractual claims but also those which merely have a non-contractual basis. The benefits of Arts 15 et seq. Brussels I should not be limited to contractual 261 262 263

Vide supra Part 3 B.I.3. Vide supra Part 2 C.II.3. Vide supra Part 3.

138

Part 4: Analysis and Reform of the Jurisdictional Rules

damages claims, especially taking into account that tortious damages claims have a greater practical meaning.

VI. Agreements on Jurisdiction Art 23 Brussels I 1. If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise …

1. Practical Implication Art 23 Brussels I addresses the situation in which the parties have agreed that a court of a Member State has jurisdiction. If one of the parties is domiciled in a Member State, the effect of a jurisdiction clause is to confer exclusive jurisdiction on the court so chosen, with the result that the general as well as the special jurisdictional rules are overridden.264 The decisive question is whether such clauses also cover cartel damages claims if parties do not include a clause explicitly stating that. The English High Court interpreted a jurisdiction clause as limited to the types of claim that the opposing party could reasonably predict when entering the contract with the clause. The court stated “… it was fair to assume that when the claimants entered the contracts in question they would have assumed that there were no secret cartels on price and market fixing and that the prices they would have to pay for the goods were not those fixed by secret cartel”.265 Consequently, the scope of a jurisdiction clause usually does not include tortious cartel damages claims.266 This is not correct as parties will usually intend to have all claims heard by one single court to facilitate proceedings and create legal certainty.267 Agreements on jurisdiction therefore cover all claims that may arise in relation to the main obligation of the contractual relationship. However, it should be noted that a jurisdiction clause between a cartel member and his client does not bind indirect subsequent purchasers. The client can also sue other

264 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 62; Staudinger/Steinrötter, JA (2012), p. 241 (244). 265 English High Court, Queen’s Bench Division (Commercial Court), 6 May 2003, Provimi v Aventis Animal Nutrition, 29 ECC (2003), p. 353 (356). 266 English High Court, Queen’s Bench Division (Commercial Court), 6 May 2003, Provimi v Aventis Animal Nutrition, 29 ECC (2003), p. 353 (356). 267 Wurmnest, EuZW (2012), p. 933 (936) with further references; Basedow in: Basedow, Private Enforcement of EC Competition Law, p. 229 (233).

D. Jurisdiction in Contract-Based EU Antitrust Damages Claims

139

members of the cartel without being bound by a choice-of-court clause.268 These scenarios demonstrate that especially in non-contractual damages claims, Art 23 Brussels I is of minor significance. Though many aspects of this provision require a careful interpretation as they give rise to numerous questions and concerns,269 only some selected antitrust specific issues shall be highlighted.

2. Benefits and Disadvantages of Choice of Court Clauses An agreement that a certain court has jurisdiction can be highly beneficial for private antitrust claimants and is thus welcome from the private enforcement’s point of view. The possibility of choosing a forum combined with the protection of consumers270 indicates that it can be taken advantage of domestic differences among the Union. Parties to agreements can influence the forum the dispute is litigated in, and thus have a wide freedom of choice between national regimes. However, such an approach will not be practicable when considering that the other party to the agreement will have to accept the conditions. Another positive feature is that such choice-of-court clauses do not only cover contractual claims, but extend to all claims, irrespective of their nature.271 Agreements on jurisdiction provide thus another possibility of combining different causes of action into a single damages claim.272 However, in pure tortious-based litigation Art 23 Brussels I usually does not play a significant role. Despite these more or less theoretic benefits, such agreements are very often drafted as part of the standard terms of sellers’, franchisors’ and licensors’ contracts273 and thus imposed upon the other party.274 It is not surprising that they usually grant exclusive competence to courts of the domicile of those parties that impose these terms.275 This is strongly detrimental for victims who are faced with the situation of “actor sequitur forum rei” without benefiting from the special jurisdictions. The situation worsens considering that the Brussels I Regulation does not provide any possibility for courts to deny jurisdiction in the case of abuse through choiceof-court clauses. However, Art 17 Brussels I makes sure that a non-consumer party to a consumer contract cannot rely on a jurisdiction agreement unless strict require268

Wurmnest, EuZW (2012), p. 933 (936). See only Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 23 EuGVO; Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 62 et seq. 270 See Art 17 Brussels I. 271 Basedow in: Basedow, Private Enforcement of EC Competition Law, p. 229 (232). 272 This is unfortunately not the case for Art 5 (1) and 5 (3) Brussels I, vide supra Part 4 D.II.5.b). 273 Schack, Internationales Zivilverfahrensrecht, § 9 para. 536. 274 Basedow, in: Basedow, Private Enforcement of EC Competition Law, p. 229 (233). 275 Basedow in: Basedow, Private Enforcement of EC Competition Law, p. 229 (233). 269

140

Part 4: Analysis and Reform of the Jurisdictional Rules

ments are met. Nevertheless, there are smaller firms, in particular wholesale traders and distributors, which are confronted with such standard terms that might bring disadvantages when it comes to damages litigation. 3. Ideas for Legal Reform The practical relevance and potential benefits of jurisdiction agreements, but also their disadvantages for antitrust damages claimants require a solution to the problems shown. It should therefore be considered how to avoid the fact that choice of court clauses are drafted as part of standard terms of contracts to the detriment of antitrust victims. However, freedom of contract does not seem to allow a concept forbidding such an approach. Nevertheless, the availability of different forums for claimants must not be taken by choice-of-court clauses. One solution would be to widen the scope of Art 17 Brussels I or to have a similar provision for small- and medium-sized undertakings. Art 23 Brussels I could also be amended in order to forbid the grant of exclusive jurisdiction in antitrust damages litigation.

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims I. Tort-Based Damages Claims and Venue Compared to contractual damages claims, non-contractual matters will be the more frequent area of private antitrust enforcement as “… actions for damages between parties not previously bound by privity being the non-contractual remedy par excellence”.276 The general jurisdictional rule of Art 2 Brussels I277 applies with the consequence that tortfeasors can be sued in the Member State of their domicile. Claimants can bundle a number of claims and proceed in one single Member State though the infringements might have been committed in several States.278 In a similar way to contract-based damages claims there are provisions allowing claimants to bring the action in an alternative forum. Many of these have already been presented and analysed. Additionally, Art 5 (3) Brussels I applies and has the greatest practical significance.

276 277 278

Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (26). Vide supra Part 4 C.I. Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 87.

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims

141

II. International Jurisdiction in Matters Relating to Tort/Forum Delicti Art 5 Brussels I A person domiciled in a Member State may, in another Member State, be sued: 3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.

1. Qualification, Scope, Ratio and Benefits for Antitrust Victims National courts used to determine “matters relating to tort” with the lex fori279 or lege causae280. The Court of Justice of the European Union stated that to ensure uniformity of the rights and obligations the notion “matters relating to tort” should not be interpreted as referring to national law of the State concerned.281 It has already been shown here282 that the Court of Justice of the European Union defines matters relating to tort “… as an independent concept covering all actions which seek to establish the liability of a defendant and which are not related to a ‘contract’ within the meaning of [Art 5 (1) Brussels I]”.283 It thereby declared the characterisation of a legal relationship as a contractual one that takes precedence. From an antitrust law point of view this means that the concept of “contractual matters” governs all actions in which the parties are parties to a restrictive agreement or contract.284 Other antitrust scenarios are governed by Art 5 (3) Brussels I. This has been accepted by German courts.285 Claims by indirect purchasers directed against a producer who conspired with other producers to fix prices are considered as non-contractual.286 This is so as

279

Higher Regional Court Munich, Judgment of 17 September 1986, RIW (1988), p. 647. Federal Court of Justice, Judgment of 24 September 1986, BGHZ 98, 263 (274). 281 Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 15. 282 Vide supra Part 4 D.II.2.c). 283 Court of Justice of the European Union, Judgment of 27 September 1988, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co. and others, Case 189/87, ECR 1988 p. 5565 para. 18; Court of Justice of the European Union, Judgment of 27 October 1998, Réunion européenne SA and Others v Spliethoff’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002, Case C-51/97, ECR 1998 p. I-6511 para. 22; Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 36. 284 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (24). 285 Higher Regional Court Hamburg, Judgment of 19 April 2007, 1 Kart U 5/06 para. 30. 286 Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91 (97). 280

142

Part 4: Analysis and Reform of the Jurisdictional Rules

the roots of the excessive price adjustment do not lie in the contract itself but in the exante coordination of the pricing by the cartel.287 Art 5 (3) Brussels I allocates jurisdiction to the courts of the place where the harmful event occurred or may occur. This is a codification of the fundamental idea in many Member States that the injured party can bring claims for damages at the place where the legal wrong was committed, where it had or may have effect on the injured party.288 Indeed, “[t]he courts for the place where the harmful event occurred are usually the most appropriate for deciding the case, in particular on the grounds of proximity and ease of taking evidence”.289 The Court of Justice of the European Union stated that such connection “… justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings”.290 This proximity of the courts291 in connection with the circumstance that the claimant is given an additional – in most cases more beneficial – forum suggests prima facie that the existence of Art 5 (3) Brussels I is favourable for claimants. 2. Place of the Harmful Event a) Interpretation: Place of Damages and Place of Acting The Court of Justice of the European Union decided that a claimant may bring his action at the place where the damage occurred (place of damages) or at the place of the event which gave rise to it (place of acting).292 Section 32 of the German Code of

287 Francq/Wurmnest, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 91 (97); it is further stated that it is more difficult to classify claims in the field of refusals to supply by dominant undertakings which do not end in damages claims. 288 Stadler in: Musielak, ZPO, Art 5 VO (EG) 44/2001 para. 21; see also Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 5 VO EG Nr. 44/2001 para. 201. 289 Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 46. 290 Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 46; Court of Justice of the European Union, Judgment of 30 November 1976, Handelskwekerij G. J. Bier BV v Mines de potasse d’Alsace SA, Case 21-76, ECR 1976 p. 1735 para. 11; Court of Justice of the European Union, Judgment of 11 January 1990, Dumez France SA and Tracoba SARL v Hessische Landesbank and others, Case C-220/88, ECR 1990 p. I-49 para. 17; Court of Justice of the European Union, Judgment of 7 March 1995, Fiona Shevill, Ixora Trading Inc, Chequepoint SARL and Chequepoint International Ltd v Presse Alliance SA, Case C-68/93, ECR 1995 p. I-415 para. 19. 291 Schack, Internationales Zivilverfahrensrecht, § 8 para. 330. 292 Court of Justice of the European Union, Judgment of 30 November 1976, Handelskwekerij G. J. Bier BV v Mines de potasse d’Alsace SA, Case 21-76, ECR 1976 p. 1735 para. 25.

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims

143

Civil Procedure has always been interpreted this way.293 The Court of Justice of the European Union correctly declared that it does not seem adequate to opt for one of the two connecting forums and exclude the other, since both can be beneficial in terms of evidence.294 Another interpretation would be contrary to the objectives of Art 5 (3) Brussels I trying to confer jurisdiction on the court which has the strongest connection to the matter in dispute295 and to facilitate the enforcement296. Depending on the circumstances of the case, both the place of damages and the place of acting are well suited for the procurement of evidence.297 However, it is argued that venues should be limited in order to avoid Forum Shopping and inconsistent judgments.298 With regard to Forum Shopping, it has been explained that a moderate choice of forums is stimulating the private enforcement of antitrust law.299 There are even fewer doubts over its desirability in cases in which all potential venues are closely linked to the dispute. This is the case for the place where the damage occurred and the place of the event giving rise to the damage.300 b) Consequences for Antitrust Damages Claimants This concept – which has been developed for cases of environmental pollution – can be transferred to antitrust law cases as there is no reason for being more restrictive

293 Schack, Internationales Zivilverfahrensrecht, § 8 paras. 334 et seq., also stating that the French civil regime has such a provision; Schlosser, EU-Zivilprozessrecht, Art. 5 EuGVVO para. 18. 294 Court of Justice of the European Union, Judgment of 30 November 1976, Handelskwekerij G. J. Bier BV v Mines de potasse d’Alsace SA, Case 21-76, ECR 1976 p. 1735 para. 17. 295 See for example Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 46; Court of Justice of the European Union, Judgment of 30 November 1976, Handelskwekerij G. J. Bier BV v Mines de potasse d’Alsace SA, Case 21-76, ECR 1976 p. 1735 para. 11; Court of Justice of the European Union, Judgment of 11 January 1990, Dumez France SA and Tracoba SARL v Hessische Landesbank and others, Case C-220/88, ECR 1990 p. I-49 para. 17; Court of Justice of the European Union, Judgment of 7 March 1995, Fiona Shevill, Ixora Trading Inc, Chequepoint SARL and Chequepoint International Ltd v Presse Alliance SA, Case C-68/93, ECR 1995 p. I-415 para. 19. 296 Schack, Internationales Zivilverfahrensrecht, § 8 para. 334. 297 Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (32). 298 See in another context Unberath/Cziupka, in: Rauscher, EuZPR/EuIPR, Art 6 Rom IIVO para. 72; Roth, in: Baetge/von Hein/von Hinden, Richtige Ordnung (2008), p. 623 (646). 299 Vide supra Part 3 B.III.1. 300 This result is further supported by Art 7 Rome II which provides a similar choice for claimants, “The law applicable to a non-contractual obligation arising out of environmental damage or damage sustained by persons or property as a result of such damage shall be the law determined pursuant to Article 4 (1), unless the person seeking compensation for damage chooses to base his or her claim on the law of the country in which the event giving rise to the damage occurred”.

144

Part 4: Analysis and Reform of the Jurisdictional Rules

if the damage is purely financial.301 Multi-market contacts of undertakings302 can cause problems with regard to the place of the harmful event. In a similar way to other areas of civil law, in particular defamation, infringements of antitrust law are characterised by the fact that the places of delicti commissi can be quite distinct.303 If undertakings agree in England to fix prices but execute these agreements on the Spanish market, the question is whether the place of the harmful event is Spain or England. c) Exceptions There are two limitations to the claimant’s choice between the courts of the place of acting and those of the place of damages304 which can be relevant in transnational antitrust damages litigation. The first one was established by the Court of Justice of the European Union in the case of defamation through a newspaper article which was available in several States (“Shevill-ruling”).305 According, victims can claim their entire damages in the courts of the place of the event giving rise to the damage, whereas the courts of the place where the damage occurred “… have jurisdiction to rule solely in respect of the harm caused in the State of the court seised”.306 As far as can be seen, the Court of Justice of the European Union did not hand down a judgment stating whether this limitation also applies to other areas of the law, notably antitrust law. However, there are Swiss307 and German308 cases indicating that this idea can be transferred to other areas of law. This illustrates that an application of the “Shevillruling” in litigation over damages claims arising from antitrust conduct is likely, or at least conceivable. The second exception from the possibility of choosing the forum is when one forum delicti commissi is located in a non-EU State. In these cases Art 5 (3) Brussels I applies but the claimant’s choice is limited to the place which is located inside the European Union.309 301 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 90 with further references. 302 See Motta, Competition Policy, p. 148 303 Ashton/Vollrath, ZWeR (2006), p. 1 (8). 304 See Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 81. 305 See Court of Justice of the European Union, Judgment of 7 March 1995, Fiona Shevill, Ixora Trading Inc, Chequepoint SARL and Chequepoint International Ltd v Presse Alliance SA, Case C-68/93, ECR 1995 p. I-415 para. 2. 306 Court of Justice of the European Union, Judgment of 7 March 1995, Fiona Shevill, Ixora Trading Inc, Chequepoint SARL and Chequepoint International Ltd v Presse Alliance SA, Case C-68/93, ECR 1995 p. I-415 para. 33, this means that the claimant could claim his entire damage at the place where the publisher of the defamatory publication is established; see also Staudinger/Steinrötter, JA (2012), p. 241 (248). 307 Reber, ZUM (2005), p. 194 (197). 308 Schlosser, EU-Zivilprozessrecht, Art. 5 EuGVVO para. 20. 309 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 81.

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims

145

3. Place of the Event Giving Rise to the Antitrust Damage/Place of Acting a) Infringement of Art 101 TFEU In the case of an infringement of Art 101 TFEU, the event which gives rise to the antitrust damage can be located at several places. The relevant conduct or harmful event can be understood as a reference to a chain of relevant actions. It can include the entering into an agreement which is then implemented in the market.310 aa) Place of Conclusion The place where anti-competitive agreements are concluded, namely where the decision, agreement or practice was determined, can be the place giving rise to the damage. This is definitely adequate when a cartel meets once to agree on and concert their future conduct. In such a scenario the clear structure of the cartel enables an unambiguous assignment to illicit conduct and forum.311 This works less well when a cartel holds meetings at numerous different places as this creates too many jurisdictions.312 However, the availability of several jurisdictions to the claimants’ benefit is an advantageous outcome and should not be changed artificially. One may fail to see why the place of acting should not be the place of conclusion of the anti-competitive agreement only because the cartel often meets at different places. Also such a quantity of forums is not unfair to the cartel members as they can decide where the meetings take place. Indeed, they even have a significant impact on the jurisdiction where potential claims will be litigated.313 Also it is too restrictive to demand that in a certain forum only those damages can be claimed which have their origin in those agreements concluded in that particular State.314 Cartels which meet regularly will build their anti-competitive conduct upon one another, and very significant meetings where basic issues are discussed will have effects beyond.315

310

Withers, JBL (2002), p. 250 (260). Wurmnest, EuZW (2012), p. 933 (934) with further references. 312 Wurmnest, EuZW (2012), p. 933 (934). 313 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 63. 314 See Wurmnest, EuZW (2012), p. 933 (935) with further references. 315 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 63. 311

146

Part 4: Analysis and Reform of the Jurisdictional Rules

bb) Place of Implementation or Operation In addition, the place of implementation of the agreements can be considered to be the relevant place of acting.316 For example, in the case of information exchange coordinated by a central unit, all cartelists can be sued in the courts of that place.317 However, often the place of implementation is the place where agreements are entered into force, notably where goods are sold at fixed prices. This will usually be the place of damages.318 If cartels implement an agreement to partition markets of the European Union by restraining from them, they can be sued in the courts of all the markets they are not active on due to the agreement. This is so as the agreement is implemented by restraining from the market.319 It is argued that the place of operation or implementation of the agreement, rather than the place of its conclusion, is the more appropriate foundation of jurisdiction, resulting in a closer nexus between court and affected market.320 This is the place where the goods are sold at artificially high prices, cartelists refuse to enter into contractual agreements or deliver limited quantities.321 It should also be recalled that in the absence of implementation, an agreement to collude cannot give rise to loss or damage.322 However, agreements which are anti-competitive by object do not have to be put into effect for there to be a violation of Art 101 TFEU.323 This suggests that a claimant should also be allowed to sue in the courts of the place where the prohibited agreement was concluded324. This result would also be in accord with the situation of defamation where the place of the causal event is where the defamation was made, not where it was received.325 One of the decisive elements of a cartel’s anti-competitive conduct is its origination, in particular if the agreement is sufficient to 316 Court of Justice of the European Union, Judgment of 27 September 1988, A. Ahlström Osakeyhtiö and others v Commission of the European Communities, joined Cases 89, 104, 114, 116, 117 and 125 to 129/85, ECR1988 p. 5193 para. 16; Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (34); Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 64; Wurmnest, EuZW (2012), p. 933 (935). 317 Wurmnest, EuZW (2012), p. 933 (935) with further references. 318 Wurmnest, EuZW (2012), p. 933 (935). 319 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 65. 320 Ashton/Vollrath, ZWeR (2006), p. 1 (8); Withers, JBL (2002), p. 250 (261). 321 Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (34). 322 Withers, JBL (2002), p. 250 (261). 323 Ashton/Vollrath, ZWeR (2006), p. 1 (8); Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (34); see Whish, Competition Law, p. 118 et seq. 324 Ashton/Vollrath, ZWeR (2006), p. 1 (8). 325 Court of Justice of the European Union, Judgment of 7 March 1995, Fiona Shevill, Ixora Trading Inc, Chequepoint SARL and Chequepoint International Ltd v Presse Alliance SA, Case C-68/93, ECR 1995 p. I-415 paras. 24, 33; see also Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 92.

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims

147

constitute an infringement. This is supported by the practical consideration that the implementation is often located at the place of damages. Not to qualify the place of conclusion as the place of acting would in many cases render the distinction between the two places meaningless. Concerns that too many jurisdictions give rise to abuse and uncertainty326 can be countered by the argument that “… the implementation of a cartel is usually incumbent upon the discrete participation of individual cartel members; accordingly, any single place of implementation will only hold jurisdiction for damage claims which can be traced to individual acts of implementation occurring at that particular place of implementation”.327 Consequently, both places can be regarded as the place that gives rise to the antitrust damage. cc) Place of the Seat A last potential link is the seat of the defendants as the place of acting.328 This is adequate as an additional forum. However, reducing the place of acting to the seat of the defendants329 is too narrow. This would mean the abandoning of the place of acting as it would be congruent to the place of the domicile and the general jurisdictional rule under Art 2 (1) Brussels I. Such an unjustified privilege to cartel members is not acceptable.330 dd) Summary Interpretation leads to the result that all three possibilities can be classified as places giving rise to the damage. The consequence would be that a damages action can be brought in any of those forums. As this is also right in terms of legal policy to allow for Forum Shopping to benefit claimants in antitrust damages litigation, there is no need for a narrower interpretation. The most significant benefit is that the forum of the place where the agreement or practice was concluded allows a centralisation of all claims against several members of the cartel. b) Infringement of Art 102 TFEU The abuse of a dominant position within the internal market has an immediate effect. Accordingly, there is no distinction to be made between conclusion and 326

(405). 327

See for example Wurmnest, EuZW (2012), p. 933 (934); Bulst, EWS (2004), p. 403

Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (34). See e. g. Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (35); Wurmnest, EuZW (2012), p. 933 (934); Bulst, EWS (2004), p. 403 (405); Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 65. 329 Bulst, EWS (2004), p. 403 (405). 330 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 66 with further references. 328

148

Part 4: Analysis and Reform of the Jurisdictional Rules

implementation. The place of the event giving rise to the damage is the place where the conduct manifesting an abuse of a dominant position takes place.331 Thus if a dominant firm sells products at abusive conditions and thereby excludes other undertakings from a certain market, the place of acting is the market where the abusive conditions apply.332 4. Place where the Antitrust Damage Occurred/Place of Damages The place where the damage occurred “… is the place where the event which gave rise to the damage produces its harmful effects”333 and the damage actually “manifests itself”334. This definition given by the Court of Justice of the European Union corresponds with Art 4 (1) Rome II which states that the law applicable to a noncontractual obligation arising out of a tort “… shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur”. a) Forum in Antitrust-Based Litigation In antitrust-based litigation the procedural place where damage occurs can be considered – consistently with Art 6 (3) (a) Rome II335 – to be the country where the market is, or is likely to be, affected.336 Suggestions to refer to the victims and therefore to identify the place where the damage occurred at the victim’s localisation are not correct.337 In antitrust law, the functioning of the market and free competition are the primary protected interests.338 Cartel and abuse delicts are not offences against property though they might trigger damages claims.339 331 Ashton/Vollrath, ZWeR (2006), p. 1 (8); Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 92 with further references. 332 Wurmnest, EuZW (2012), p. 933 (934). 333 Court of Justice of the European Union, Judgment of 16 July 2009, Zuid-Chemie BV v Philippo’s Mineralenfabriek NV/SA, Case C-189/08, ECR 2009 p. I-6917 para. 27. 334 Court of Justice of the European Union, Judgment of 16 July 2009, Zuid-Chemie BV v Philippo’s Mineralenfabriek NV/SA, Case C-189/08, ECR 2009 p. I-6917 para. 27. 335 Wurmnest, EuZW (2012), p. 933 (935). 336 Heinze, IPRax (2009), p. 231 (233 et seq.); Lindacher, Internationales Wettbewerbsverfahrensrecht, § 9 para. 12. 337 Not convincing Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (27) who tries to identify a “… specific harm suffered by the victim of the infringement”. 338 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 68 et seq.; Bulst, EWS (2004), p. 403 (406); Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 84a; Wurmnest, EuZW (2012), p. 933 (935). 339 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 69; Wurmnest, EuZW (2012), p. 933 (935).

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims

149

Horizontal anti-competitive agreements affect the market on which the preconditions for competition are distorted. Consequently, the flow of goods and the domicile of the purchasers are usually the decisive factors.340 If claimants suffer loss arising out of the purchase of goods or services at an inflated price, the damage must be regarded as having occurred at the place where the goods or services are purchased341, where the direct economic loss was sustained342. For example, an agreement limiting the supply of Spanish hotel rooms for German tourists has an effect on the German market343 with the consequence that a claim for antitrust damages can be brought in Germany as the forum delicti commissi under Art 5 (3) Brussels I.344 Jurisdiction can also be claimed in the Member State of the market from which an undertaking was excluded.345 Effects of vertical agreements have to be determined with regard to the position of third firms which are active on the same market as the cartel. If a manufacturer from China agrees with his distributor from France that the latter does not sell products in Germany, the German market is affected.346 The same applies for infringements of Art 102 TFEU. If damage arises out of an abuse of a dominant position, the place of damages is the market on which the harmful effects of the abusive conduct are immediately felt.347 b) Unrestricted Freedom of Choice Determining international jurisdiction gets more complicated if a claimant considers taking action for compensation for damage arising out of the effects of anti-competitive conduct on his ability to compete as a player in a certain market.348 Jurisdiction can be claimed in the Member State of the market from which an undertaking was excluded349 which may geographically cover each Member State of the Union350. Consequently, where a claimant is attempting to enter such a market he may claim in each of those Member States.351 This would lead to unrestricted Forum

340

Wurmnest, EuZW (2012), p. 933 (937) with further references. Withers, JBL (2002), p. 250 (261). 342 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 95; Ashton/Vollrath, ZWeR (2006), p. 1 (8); see Regional Court Dortmund, Judgment of 1 April 2004, 13 O 55/02 Kart. para. 15. 343 Higher Regional Court Hamburg, Judgment of 19 April 2007, 1 Kart U 5/06 para. 33. 344 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 84a. 345 Ashton/Vollrath, ZWeR (2006), p. 1 (8). 346 Wurmnest, EuZW (2012), p. 933 (937). 347 Withers, JBL (2002), p. 250 (262); Wurmnest, EuZW (2012), p. 933 (937). 348 Withers, JBL (2002), p. 250 (261). 349 Ashton/Vollrath, ZWeR (2006), p. 1 (8). 350 Withers, JBL (2002), p. 250 (261). 351 Withers, JBL (2002), p. 250 (261). 341

150

Part 4: Analysis and Reform of the Jurisdictional Rules

Shopping in proceedings relating to cartels and abuses with effects felt throughout the European Union.352 This is an unfortunate outcome as it contradicts the principle that jurisdiction is generally at the place where the defendant is domiciled, “… save in a few welldefined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor”.353 It has been shown that Forum Shopping cannot be understood as an unconditional freedom to choose between all European jurisdictions. This would enable seising a court which is not well-placed to hear a claim.354 c) Indirect Consequences The place where the harmful event occurred must be distinguished from the place of the indirect consequences of this event. The latter has no relevance for jurisdictional and choice-of-law purposes. Though the place where the harmful event occurred covers both the place of acting and the place of damages, it must not be understood to be so wide as to encompass the place where the consequences of that harmful event can be felt.355 Consequently, Art 5 (3) Brussels I does not allocate jurisdiction to the courts of the place where an antitrust victim has suffered financial damage following upon initial damage.356 Rightly so, otherwise claimants would practically have an claimant’s venue as the damage following the initial damage usually occurs at the place of their domicile.357 5. Ideas for Legal Reform a) Benefits of Forum Delicti Commissi358 Summing up briefly, the jurisdiction in matters relating to tort is right from the point of view of antitrust victims aiming to recover their damage. Art 5 (3) Brussels I deviates from the obligation to claim at the defendant’s domicile and gives additional alternatives. Indeed, the courts of the place where the harmful event occurred – being 352 Ashton/Vollrath, ZWeR (2006), p. 1 (8); see also Withers, JBL (2002), p. 250 (261 et seq.) who only fears that claimants are always given the possibility of suing in their home forum. 353 See Recital 11 Brussels I; Withers, JBL (2002), p. 250 (262). 354 Vide supra Part 3 B.III.3. 355 Court of Justice of the European Union, Judgment of 19 September 1995, Antonio Marinari v Lloyds Bank plc and Zubaidi Trading Company, Case C-364/93, ECR 1995 p. I-2719 para. 14; Staudinger/Steinrötter, JA (2012), p. 241 (248). 356 Court of Justice of the European Union, Judgment of 19 September 1995, Antonio Marinari v Lloyds Bank plc and Zubaidi Trading Company, Case C-364/93, ECR 1995 p. I-2719 para. 15. 357 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 5 EuGVO para. 88. 358 Vide supra Part 4 E.II. with references.

E. Jurisdiction in Tort-Based EU Antitrust Damages Claims

151

the place of the event giving rise to the damage and the one where it occurs – are more appropriate for deciding the case than the courts of the defendant’s domicile, notably on the grounds of proximity.359 With regard to the place of acting, several interpretations are possible. It has been shown that either the place where an anti-competitive agreement has been concluded, where it has been implemented or the seat of the cartelists can be regarded as places of acting. These forums jointly with the one at the place of the damage are all linked to the market and the anti-competitive conduct. They allocate jurisdiction to adequate courts which are even often at the domicile of purchasers, clients and distributors. Another benefit is that the forum of the place where the agreement or practice was concluded allows a centralisation of all claims against the members of the cartel. These observations suggest that Art 5 (3) Brussels I in its current version is already a key to a more effective private enforcement of antitrust law. A legislative reform is not necessary as scholarly interpretation and the case-law of the Court of Justice of the European Union can clarify the presented aspects. b) Avoiding Unlimited Forums and Abusive Forum Shopping The only disadvantage of Art 5 (3) Brussels I is if a potential competitor considers taking action to achieve compensation for damage arising out of the effects of anti-competitive conduct on his ability to enter a certain market.360 He may claim damages in each of the Member States361 which would lead to unrestricted Forum Shopping362. This situation can be avoided by applying the “Shevill-rule” to antitrust cases.363 It states that victims can claim their entire damages in the courts of the place of the event giving rise to the damage, whereas the courts of the place where the damage occurred “… have jurisdiction to rule solely in respect of the harm caused in the State of the court seised”.364 Applying this rule would not allow the claimant to sue the whole cartel in each of the States concerned. If he wants to be compensated for the entire harm he will have to take action at the defendant’s domicile or at the place of acting.365

359

Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 46. 360 Withers, JBL (2002), p. 250 (261). 361 Withers, JBL (2002), p. 250 (261). 362 Ashton/Vollrath, ZWeR (2006), p. 1 (8); see also Withers, JBL (2002), p. 250 (261 et seq.) who only fears that claimants are always given the possibility of suing in their home forum. 363 Withers, JBL (2002), p. 250 (262); vide supra Part 4 E.II.2.c). 364 Court of Justice of the European Union, Judgment of 7 March 1995, Fiona Shevill, Ixora Trading Inc, Chequepoint SARL and Chequepoint International Ltd v Presse Alliance SA, Case C-68/93, ECR 1995 p. I-415 para. 33. 365 See Withers, JBL (2002), p. 250 (262).

152

Part 4: Analysis and Reform of the Jurisdictional Rules

A disadvantage of applying the “Shevill-rule” is that claimants would have to launch parallel proceedings in all the Member States in which they suffered loss.366 However, Art 6 (1) Brussels I offers relief to the claimant in these circumstances as it can be used to combine the actions before one court.367 In the case of a pan-European cartel, the victim can decide whether to bring his claim against all defendants in a jurisdiction in which one of the cartel members is domiciled.368 Additionally, it has been shown that interpretation comes to the result that the place of conclusion, implementation and seat of the cartel members can be regarded as place of acting. Claimants will therefore often have different forums to claim the entire damage, even without having the possibility of opting for the place of damages. Regulatory, similar contextual structures and interests between defamation through newspapers and anti-competitive conduct argue in favour of adopting the “Shevill-rule” to antitrust law.369 “Whereas the abuse of a market dominant position is often directed against individual competitors, customers or suppliers, scattered, multistate damages will frequently result in the case of cartels and firms acting concertedly.”370

F. New Venues Granted that the proposed ideas for legal reform in this thesis are implemented, antitrust victims can always sue the other party at the latter’s domicile. Consumers or associations or other bodies acting on behalf of them can also choose to claim at the consumer’s domicile. These jurisdictions govern all claims, irrespective of the cause of action. In the case of contractual damages claims, the place of performance (which is often equivalent to the domicile of the claimant) is one more possibility. With regard to tortious damages claims, the place of acting and the place of the damage constitute additional forums encompassing numerous different jurisdictions. Alternatively, undertakings can be sued where their branch or agency is situated. Litigation against cartels involving several defendants is possible in all forums where one of the defendants is domiciled. This makes a considerable number of forums. In addition, non-EU parties must face being sued in these jurisdictions. Nevertheless, the question is whether there is a need for additional venues. The European Commission made the first move and plans to create an additional forum for disputes involving defendants domiciled outside the Union.371

366 367 368 369 370 371

Ashton/Vollrath, ZWeR (2006), p. 1 (8 et seq.). Ashton/Vollrath, ZWeR (2006), p. 1 (9). Fawcett, 44 ICLQ (1995), p. 744 (749). Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (33). Basedow, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 31 (33). Proposal for Recast, p. 8.

F. New Venues

153

The proposal provides a new Art 25 Brussels I stating that “[w]here no court of a Member State has jurisdiction in accordance with [the Brussels I Regulation], jurisdiction shall lie with the courts of the Member State where property belonging to the defendant is located”.372 The value of the property has to be proportionate to the value of the claim and the dispute must have sufficient connection with the Member State of the court seised.373 This proposal ensures that claimants have equal access to courts despite the absence of the defendant in the European Union.374 Though the possibility of being sued at the place where moveable assets are located has been criticised as a “foreigner’s forum”375 and rejected376, this proposed amendment must be appreciated. Defendants who have allegedly infringed European antitrust law would have to face being sued in the European Union. Apart from that, the new Art 25 Brussels I will not necessarily change the procedural situation as many regimes already have corresponding national provisions in place.377 In addition, there is a Forum Shopping potential of asset-based jurisdiction.378 The proposed Art 25 Brussels I grants access to national justice379 and gives the possibility of suing a defendant in the courts of the place where property is located. This can naturally involve a number of jurisdictions. Unfortunately, the EU legislator did not implement this provision in the Brussels I Recast.

372

Proposal for Recast, p. 33. Proposal for Recast, p. 33 et seq. 374 Proposal for Recast, p. 8; it should be noted that Section 23 of the German Code of Civil Procedure has always given special jurisdiction to the courts of the location of assets. This provision applies in cases in which the defendant is domiciled outside the Union. 375 Schack, 97 ZZP (1984), p. 46 (48 et seq.). 376 See Patzina, in: MüKo ZPO Volume 1, § 23 ZPO para. 2 with further references. 377 Proposal for Recast, p. 8. 378 Juenger, 63 Tul L Rev (1988 – 1989), p. 553 (567). 379 See in another context Juenger, 63 Tul L Rev (1988 – 1989), p. 553 (568). 373

Part 5

Analysis and Ideas for Legal Reform of Lis Pendens and Related Actions A. Ratio and Scope of Arts 27 and 28 Brussels I Art 27 Brussels I 1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court. Art 28 Brussels I 1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. 3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

To guarantee the harmonious administration of justice, the possibility of concurrent proceedings must be minimised through a mechanism to resolve cases of lis pendens and related actions.1 Arts 27 and 28 Brussels I are meant to avoid irreconcilable judgments that would potentially not be recognised in accordance with Art 34 (3) Brussels I.2 These rules’ value to correct wide bases of jurisdiction3 as well as their potential to serve defendants4 has been discussed.5 Consequently, any legal 1

See Recital 15 Brussels I. Court of Justice of the European Union, Judgment of 8 December 1987, Gubisch Maschinenfabrik KG v Giulio Palumbo, Case 144/86, ECR 1987 p. 4861 paras. 8 et seq.; Court of Justice of the European Union, Judgment of 9 December 2003, Erich Gasser GmbH v MISAT Srl, Case C-116/02, ECR 2003 p. I-14693 para. 41. 3 Fawcett, 35 N Ir Legal Q (1984), p. 142 (147). 4 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.04. 5 Vide supra Part 3 B.III.3.c). 2

B. Avoiding Parallel Proceedings

155

reform should ensure that parallel proceedings are avoided (B.) and that a wellplaced court hears and determines the damages claim. In addition, the defendants’ “Reverse Forum Shopping”6 must be constrained (C.).7 Indeed, these problems are the other side of the coin, considering the outstanding benefits for private enforcement entailed by broader jurisdictional rules.

B. Avoiding Parallel Proceedings Broad bases of jurisdiction contribute to the possibility that a number of courts in different Member States may assert jurisdiction in respect of the same or related claims.8 The resulting “… difficulties extend beyond the immediate expense and inconvenience which fighting two or more sets of proceedings necessarily entails for the parties”.9 They also lead to different and inconsistent decisions on related matters that should be treated together and is therefore detrimental to legal certainty.10 Another aspect which should be avoided is the “… race to a judgment in those courts exercising jurisdiction”11 in order to be able to claim that the previous judgment renders other proceedings res judicata12. There is no doubt that parallel court proceedings and their incompatible outcomes have to be stopped entirely as they cause delay, injustice and higher costs.13

I. Response of the Brussels I Regulation Art 27 (1) Brussels I states that “… any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established”. Art 27 (2) Brussels I demands that where the jurisdiction of the court first seised is established, any other court shall decline jurisdiction in favour of that court. The emphasis of Art 27 Brussels I is consequently to pursue the chronological sequence of proceedings by establishing a “first-filed-rule”.14 The 6

See the notion at Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.11. Vide supra Part 3 B.IV. 8 Bell, Forum Shopping and Venue in Transnational Litigation, para. 1.26. 9 Bell, Forum Shopping and Venue in Transnational Litigation, para. 1.27. 10 Bell, Forum Shopping and Venue in Transnational Litigation, para. 1.27; Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 119. 11 Bell, Forum Shopping and Venue in Transnational Litigation, para. 3.31; Bell, Forum Shopping and Venue in Transnational Litigation, para. 1.27. 12 Bell, Forum Shopping and Venue in Transnational Litigation, para. 3.31; Bell, Forum Shopping and Venue in Transnational Litigation, para. 1.27. 13 McLachlan, Lis Pendens in International Litigation, p. 23. 14 Bell, Forum Shopping and Venue in Transnational Litigation, para. 3.27 with further references; Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, 7

156 Part 5: Analysis and Ideas for Legal Reform of Lis Pendens and Related Actions

second seised court is required to decline jurisdiction and may not even examine jurisdiction of the first seised court.15 On the contrary to Art 27 Brussels I, Art 28 (1) Brussels I states that “… any court other than the court first seised may stay its proceedings”. It consequently permits a second seised court to stay its proceedings.16 This provision’s complementing character is designed to address those situations, which do not fall within the narrow confines of Art 27 Brussels I.17 If antitrust actions are not identical within the meaning of Art 27 Brussels I, but only related, Art 28 Brussels I can apply.18 The approach of both the provisions obviously avoids the risk of parallel proceedings and inconsistent decisions.

II. Applicability in Antitrust Law Having demonstrated that Arts 27 et seq. Brussels I help to avoid parallel proceedings in different Member States’ courts, it consequently has to be shown whether they play a significant role in cross-border antitrust damages litigation. 1. Art 27 Brussels I and Antitrust Damages Claims The Court of Justice of the European Union held that Art 27 Brussels I requires parallel proceedings to involve the following elements: same subject-matter, same cause of action and the same parties.19 For example, all private antitrust claims for damages arising out of the same alleged infringements of EU antitrust law have the same subject-matter.20 Nevertheless, the Court of Justice of the European Union stated that the parties must be identical which means that it is not sufficient if only some of the claimants or defendants are parties to the other proceedings.21 This strict p. 121; Kropholler/von Hein, Europäisches Zivilprozessrecht, vor Art 27 EuGVO para. 1; Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 27 VO EG Nr. 44/2001 para. 4. 15 Court of Justice of the European Union, Judgment of 27 June 1991, Overseas Union Insurance Ltd and Deutsche Ruck Uk Reinsurance Ltd and Pine Top Insurance Company Ltd v New Hampshire Insurance Company, Case C-351/89, ECR 1991 p. I-3317 para. 25. 16 Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 28 VO EG Nr. 44/ 2001 para. 18; Ashton/Vollrath, ZWeR (2006), p. 1 (11). 17 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 127. 18 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 127. 19 Court of Justice of the European Union, Judgment of 8 December 1987, Gubisch Maschinenfabrik KG v Giulio Palumbo, Case 144/86, ECR 1987 p. 4861 para. 14. 20 Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 125 with further references; see Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 125 et seq. for further complex examples with regard to the subject-matter in competition law cases. 21 Court of Justice of the European Union, Judgment of 6 December 1994, The owners of the cargo lately laden on board the ship “Tatry” v the owners of the ship “Maciej Rataj”, Case

C. Defendants’ Tactics: Reverse Forum Shopping

157

interpretation of “same parties” is an obstacle to the application of Art 27 Brussels I in litigation which have their origin in the same infringement.22 For instance, different purchasers that bought the goods from the cartel members are not the same parties. This is all the more true for indirect purchasers and final consumers, especially when they are organised in a class or represented by consumer associations.23 This illustrates that Art 27 Brussels I will usually be of no use in antitrust-based damages litigation.24 2. Art 28 Brussels I and Antitrust Damages Claims Having shown that the application of Art 27 Brussels I to antitrust litigation will usually fail due to the requirement of “same parties”, it is of interest that Art 28 Brussels I does not demand this element. Art 28 (1) Brussels I only requires “related actions”. Art 28 (3) Brussels I makes it clear that “… actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments”. Bearing in mind the objective of Art 28 Brussels I – avoiding conflicting and contradictory decisions – the question whether actions are related should be answered in a broad way.25 It seems that actions for damages for private antitrust enforcement launched in different European jurisdictions in relation to the same underlying anti-competitive conduct would be likely to give rise to irreconcilable judgments.26 This illustrates that at least Art 28 Brussels I applies to antitrust actions for damages and can therefore avoid the risk and threats of parallel proceedings.

C. Defendants’ Tactics: Reverse Forum Shopping Despite helping to avoid parallel proceedings, Arts 27 et seq. Brussels I create a system that can also be used by defendants. They will have as much interest as claimants in choosing a forum in which it is most likely to be successful or to further the strategic motivation, which may be fragmentation of the proceedings, delay or increasing costs.27 Defendants may try to force the litigation into a certain forum by C-406/92, ECR 1994 p. I-5439 para. 33; Ashton/Vollrath, ZWeR (2006), p. 1 (11); Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 27 VO EG Nr. 44/2001 para. 12. 22 Ashton/Vollrath, ZWeR (2006), p. 1 (11). 23 Ashton/Vollrath, ZWeR (2006), p. 1 (11); Danov, JPIL (2010), p. 359 (381). 24 Ashton/Vollrath, ZWeR (2006), p. 1 (11). 25 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 128 with further references; see also Ashton/Vollrath, ZWeR (2006), p. 1 (11); Danov, JPIL (2010), p. 359 (382). 26 Ashton/Vollrath, ZWeR (2006), p. 1 (12). 27 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.03.

158 Part 5: Analysis and Ideas for Legal Reform of Lis Pendens and Related Actions

applying for a stay of proceedings or by initiating proceedings in the preferred forum.28 These defence strategies are as aggressive as those of the claimants.29

I. Staying proceedings – Forum Non Conveniens A possibility for cartelists and dominant firms to influence the forum in which a cross-border antitrust damages claim is litigated, is an application for a stay of proceedings on the basis of the doctrine of forum non conveniens.30 This is a legal doctrine whereby a court may “… decline to hear a case over which it has jurisdiction”31 where there is a more appropriate or convenient forum available to the parties32. As private antitrust litigation over damages claims – especially tortious claims – often involves suits against defendants in several jurisdictions,33 it is beyond doubt that several courts can be well-placed to deal with the action. The doctrine of forum non conveniens is on the one hand a strategy for defendants to limit the claimants’ possibility of influencing the forum. This bears a potential for abuse and parties often argue against their own convenience to have the case heard abroad.34 On the other hand, the doctrine can be a corrective for wide bases of jurisdiction and contribute to the objective of allocating jurisdiction to well-placed courts.35 1. Applicability of Forum Non Conveniens It is questionable whether a national court which has jurisdiction under the Brussels I Regulation can decline jurisdiction by stating it is forum non conveniens. This approach is foreign to the German system of civil procedure whereas it applies in English law.36 In general, “… the burden of proof rests on the defendant to persuade

28

Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.04. Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.04 with further references. 30 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.38. 31 Reynolds, 70 Tex L Rev (1991 – 1992), p. 1663 (1664). 32 Schack, Internationales Zivilverfahrensrecht, § 10 para. 560; Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 121 with further references. 33 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (42). 34 Reynolds, 70 Tex L Rev (1991 – 1992), p. 1663 (1672); Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.38. 35 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 135 with further references; Schack, Internationales Zivilverfahrensrecht, § 10 para. 560 gives the adequate metaphor of a valve. 36 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 135 with further references. 29

C. Defendants’ Tactics: Reverse Forum Shopping

159

the court to exercise its discretion to grant a stay”.37 The defendant must not only demonstrate that England is not the appropriate jurisdiction for the trial, but also that there is another available forum which is better placed.38 The doctrine of forum non conveniens was also applicable in international jurisdiction under the Brussels Convention. In Section 49 of the Civil Jurisdiction and Judgments Act 1982 in its original version as enacted it was stated: “Nothing in this Act shall prevent any court in the United Kingdom from staying, sisting, striking out or dismissing any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the 1968 Convention.”39 The Court of Justice of the European Union rejected idea of forum non conveniens and ruled “… that the Brussels Convention precludes a court of a Contracting State from declining the jurisdiction conferred on it by Article 2 of that convention”.40 As the spirit and purpose of the Brussels I Regulation correspond with those of the Brussels Convention, this interpretation can be applied mutatis mutandis to the current legal situation.41 2. Position of Courts as Justification for Forum Non Conveniens? Even though Arts 27 et seq. Brussels I can prevent parallel proceedings, it is “… unfortunate that jurisdiction in such cases would depend on the question who is faster in lodging his claim. A more satisfactory result would have been reached if the court first seized was entitled to decline jurisdiction in cases where agreement or practice has no substantial direct (actual or foreseeable) effects on competition within the Member State.”42 Indeed, a case-by-case decision considering the economic context of antitrust infringements is a more appropriate solution to determine the best-placed court than generally applicable provisions. A court could be allowed to decline to exercise jurisdiction in a case where “… the anti-competitive activity is in significant part foreign”43 or if it does not see “… a real and close connection between the forum and the dispute”44.

37

(476). 38

House of Lords, 19 November 1986, Spiliada Maritime v Cansulex, AC (1987) p. 460

Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 136; House of Lords, 19 November 1986, Spiliada Maritime v Cansulex, AC (1987) p. 460 (476 et seq.). 39 See Kropholler/von Hein, Europäisches Zivilprozessrecht, vor Art 2 EuGVO para. 20. 40 Court of Justice of the European Union, Judgment of 1 March 2005, Andrew Owusu v N. B. Jackson, trading as “Villa Holidays Bal-Inn Villas” and Others, Case C-281/02, ECR 2005 p. I-1383 para. 46. 41 Kropholler/von Hein, Europäisches Zivilprozessrecht, vor Art 2 EuGVO para. 20. 42 Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 129. 43 See Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 137 for the situation de lege lata in England.

160 Part 5: Analysis and Ideas for Legal Reform of Lis Pendens and Related Actions

However, the introduction of the forum-non-conveniens doctrine is still not an option. It has been illustrated that defendants can seek to force the litigation into a certain forum by applying for a stay of proceedings.45 Such a practice would withdraw the claimants’ granted choice between forums and destroy the benefits of Forum Shopping. This demonstrates that allowing courts to decline jurisdiction would hamper the chance of success of antitrust damages claims and clearly contradicts the ideas of reform in this thesis. It is also liable to reduce the predictability of international jurisdiction and thereby undermine the principle of legal certainty46 which is one of the basic objectives of the jurisdictional rules47. Legal uncertainty would even be aggravated as allowing forum non conveniens in the context of the Brussels I Regulation would affect its uniform application as the doctrine is only recognised in some Member States.48 Additionally, the doctrine violates German constitutional law, notably the principle of the lawful judge as guaranteed by Art 101 (1) of the German Constitution.49 The defendants’ strategy of Reverse Forum Shopping must not render impossible Forum Shopping. Taking into account that where “… the courts of several states have jurisdiction, the plaintiff has deliberately been given a right of choice, which should not be weakened by the application of the doctrine of forum non conveniens”.50 The allocation of international jurisdiction to well-placed courts is one of the basic principles of the proposed ideas for reform in this thesis51 and has been one when drafting the Brussels I Regulation52. It is therefore not worth introducing the disadvantages forum non conveniens would bring.

44 See Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 137 for the situation de lege lata in England. 45 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.04. 46 Schack, Internationales Zivilverfahrensrecht, § 10 para. 568. 47 Court of Justice of the European Union, Judgment of 1 March 2005, Andrew Owusu v N. B. Jackson, trading as “Villa Holidays Bal-Inn Villas” and Others, Case C-281/02, ECR 2005 p. I-1383 para. 41; see also Recital 11 Brussels I. 48 Court of Justice of the European Union, Judgment of 1 March 2005, Andrew Owusu v N. B. Jackson, trading as “Villa Holidays Bal-Inn Villas” and Others, Case C-281/02, ECR 2005 p. I-1383 para. 43. 49 Pfeiffer, in: Schmidt, 50 Jahre Bundesgerichtshof – Festgabe aus der Wissenschaft (2000), p. 617 (628); less restrictive Schack, Internationales Zivilverfahrensrecht, § 10 para. 565 and Schack, Einführung in das US-amerikanische Zivilprozessrecht, p. 33 et seq. 50 Report on the Convention on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters and to the Protocol on its interpretation by the Court of Justice of 9 October 1978, OJ (1979) C 59 p. 71 (97). 51 Vide supra Part 3 B.IV. 52 Recital 11 Brussels I.

C. Defendants’ Tactics: Reverse Forum Shopping

161

II. Negative Declaratory Proceedings Another technique of Reverse Forum Shopping is an action for negative declaratory relief53, a “pre-emptive jurisdiction strike”. To seek a declaration from a court that the applicant54 is not, or less, liable to a potential claimant in foreign proceedings is another way to resist litigation in a certain forum.55 1. Theoretical Basics The reason why this technique works is to be seen in the rules on lis pendens and especially in the interpretation of “same cause of action”. The Court of Justice of the European Union ruled that in a case where a party brings an action to enforce an international sales contract and the other party subsequently brings proceedings in another forum seeking rescission of the same contract,56 both sets of proceedings involve the same cause of action and the same subject matter.57 The court second seised is consequently required to decline jurisdiction. This illustrates that, to approve the same cause of action, it is sufficient that a dispute about the validity of the contract is at the “core” of proceedings.58 Even partial identity forces a court to stay its proceedings.59 Following this line of reasoning, an antitrust damages claim and an action for a declaratory judgment launched by the tortfeasor aiming at a declaration that the latter’s liability is limited, have the same cause of action, namely the liability of the defendant in the damages action.60 As the chronological order of the actions is decisive, even an earlier action for a declaratory judgment is prior to a subsequent

53 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.250 with further references; see also Schack, Internationales Zivilverfahrensrecht, § 8 para. 336 with further references. 54 The potential defendant in the foreign proceedings. 55 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.250 56 Court of Justice of the European Union, Judgment of 8 December 1987, Gubisch Maschinenfabrik KG v Giulio Palumbo, Case 144/86, ECR 1987 p. 4861 summary. 57 Court of Justice of the European Union, Judgment of 8 December 1987, Gubisch Maschinenfabrik KG v Giulio Palumbo, Case 144/86, ECR 1987 p. 4861 paras. 15 et seq. 58 The so called “Kernpunkttheorie”, Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 7 with further references; see also Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 27 VO EG Nr. 44/2001 para. 30. 59 Higher Regional Court Karlsruhe, Judgment of 28 March 2006, 8 U 218/05 para. 46; Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 9. 60 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 8; Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (57); Court of Justice of the European Union, Judgment of 6 December 1994, The owners of the cargo lately laden on board the ship “Tatry” v the owners of the ship “Maciej Rataj”, Case C-406/92, ECR 1994 p. I-5439 para. 39.

162 Part 5: Analysis and Ideas for Legal Reform of Lis Pendens and Related Actions

damages action.61 The applicant has consequently the same opportunity to choose the forum as the damages claimant who may only bring a counter-claim based on Art 6 (3) Brussels I.62 The choice of a forum and thereby to take the claimant’s opportunity to choose one is not the only benefit for cartelists and firms in such a case. A “pre-emptive jurisdiction strike” is often initiated in a notoriously slow forum.63 The Brussels I Regulation does not contain any provision under which Arts 27 and 28 Brussels I cease to apply because of the length of proceedings before foreign courts.64 The second seised court is even not entitled not to decline proceedings if it is convinced that the defendant commits an abuse of rights.65 Litigants are therefore given the possibility of seising a court “… that they know does not have jurisdiction but which may take considerable time to determine this preliminary point, thereby delaying the possibility for the adversary to bring proceedings in the proper forum”.66 This underlines that the system of lis pendens is very vulnerable to abuse. Such a technique can in theory destroy all the benefits for victims analysed and proposed in this thesis. 2. Practical Application Having outlined the threat that negative declaratory actions pose for the option to choose between different forums, it remains to be seen whether this scenario is likely to happen frequently. Given the limited duration of intellectual property rights, the technique to use negative declaratory actions is particularly beneficial in the area of intellectual property law.67 The interviewees’ submissions are of high value to identify the best tactic for a firm that has allegedly infringed EU antitrust law.68 The initiation of a “pre-emptive strike” was discussed actively on this occasion. In most cases, solicitors retain a reluctant attitude due to lack of efficiency. It has been stated: “… [Y]ou basically have to sue every potential claimant in this jurisdiction with respect to all of these 61 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 10 with further references; see also Geimer, in: Geimer/Schütze, Europäisches Zivilverfahrensrecht, Art 27 VO EG Nr. 44/2001 para. 35. 62 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 10. 63 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 10; the interview respondents mentioned Italy and Belgium in this context as inefficient forums and in one case even Germany was considered as being among the slow court systems, Kammin/ Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (71). 64 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 10. 65 Kropholler/von Hein, Europäisches Zivilprozessrecht, Art 27 EuGVO para. 11 with further references. 66 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (57). 67 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (57). 68 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (70).

C. Defendants’ Tactics: Reverse Forum Shopping

163

claims. And usually this will not work, you do not get all of them and that means that you will be subject of an action which will be brought by one of the other plaintiffs”. Some respondents from Germany even think that this tactic does not have any relevance at all.69 This demonstrates that negative declaratory proceedings are a rather theoretical issue and are not used very frequently. Cartel members do not seem to take the initiative of bringing a declaratory action and it is also not manageable to pre-empt actions by all possible claimants.70 The fact that antitrust-based claims are not as limited in time as intellectual property rights makes it unlikely that the significance of this tactic will grow.71 Also, from a general point of view, there are not good reasons for “… holding defendants slave to the procedural tradition that they must wait to be sued and thus forfeit potentially important advantages relating to the venue and timing of litigation”.72 3. Suggestions for Legal Reform Though the threat arising from negative declaratory proceedings is rather limited, private antitrust damages actions are picking up.73 Consequently, an increased appearance of such “jurisdiction strikes” cannot be ruled out and a solution is required.74 The European Commission proposed an amendment to Art 27 Brussels I75 stating that “… the court first seised shall establish its jurisdiction within six months except where exceptional circumstances make this impossible. Upon request by any other court seised of the dispute, the court first seised shall inform that court of the date on which it was seised and of whether it has established jurisdiction over the dispute or, failing that, of the estimated time for establishing jurisdiction”.76 Apart from the question whether Art 81 (1) and (2) TFEU is an adequate basis for this harmonisation, there are concerns as to the constitutionality of such a provision.77 Nevertheless, such an amendment to Art 27 Brussels I would discourage actions by potential defendants to delay proceedings by seising a court which is apparently not competent.78 However, such a rule does not stop applicants from choosing the forum which is a much more significant disadvantage for claimants in antitrust-based 69 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (71). 70 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (57). 71 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (57). 72 Bell, Forum Shopping and Venue in Transnational Litigation, para. 4.284. 73 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61. 74 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (58). 75 Art 29 Brussels I in the Proposal. 76 Proposal for recast, p. 35. 77 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (58). 78 Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (58).

164 Part 5: Analysis and Ideas for Legal Reform of Lis Pendens and Related Actions

damages actions. The legislator should additionally introduce a provision into Arts 27 et seq. Brussels I which allows courts seised to examine whether the action is merely abusive and has the only intention of depriving the claimants of their choice of forums.79

79

Whereas this shows that the proposal of the European Commission is not going far enough, the legislator only managed to implement into Art 29 Brussels I Recast that “… upon request by a court seised of the dispute, any other court seised shall without delay inform the former court of the date when it was seised”. Again, the legislator should have been more courageous and should have, at least, followed the proposal of the European Commission.

Part 6

Summary, Conclusion, Policy The current situation of damages claims in cases of antitrust infringements is one of underdevelopment,1 though private antitrust enforcement is picking up2. Without the realistic possibility of achieving compensation, antitrust rules would be pointless as “… actions for damages before the national courts can make a significant contribution to the maintenance of effective competition in the [Union]”.3 Consequently the European Commission4, commentators5, solicitors6, practitioners7 and the Court of Justice of the European Union8 emphasise the significance of encouraging the private enforcement of EU antitrust rules before national courts.

A. Suggestions for Legal Reform I. Fundamental Considerations9 From the point of view of the respondents interviewed in field research there is a strong case against fundamental reform and “in favour of a system of regulatory competition between procedural and substantive regimes”.10 Considering costs, legal 1

Vide supra Part 1 C.I. Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61. 3 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 para. 27. 4 White Paper on Damages actions, p. 1 et seq. 5 Beschorner/Hüschelrath, in: Möschel/Bien, Kartellrechtsdurchsetzung durch private Schadensersatzklagen?, p. 9 (10); Komninos, EC Private Antitrust Enforcement, p. 8 et seq. 6 Reher, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 159 (159 et seq.). 7 Böge/Ost, ECLR (2006), p. 197. 8 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 paras. 26 et seq. 9 Vide supra Part 2 and 3 with references. 10 Danov/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 81 (89). 2

166

Part 6: Summary, Conclusion, Policy

and traditional inconsistencies as well as constitutional problems, harmonisation is the less promising way to promote antitrust damages claims and strengthen the situation of victims.11 The key rather lies in national laws and their use as determined by the rules of private international law, notably the Brussels I Regulation. Domestic substantive rules, such as availability of punitive damages, burden of proof, requirement of fault and the passing-on defence,12 as well as rules on procedure, like collective redress mechanisms, costs and access to evidence13 play an outstanding role in litigation over antitrust damages claims. As these rules vary greatly among European Member States, the role of the lex fori suggests that jurisdictional rules are a decisive factor for victims to benefit from differences between national substantive laws. In particular, the fact that private antitrust enforcement is “… at the crossroads between two sectors characterised by different legal traditions, namely competition law and private international law”,14 gives rise to problems, but also to opportunities. Forum Shopping is not an adverse consequence of cross-border litigation, it is a “… rational response to a situation where a range of forums is available for the resolution of a given transnational dispute”.15 When considering that if claimants are given a right of choice by the legislator,16 one should accept that legal advisers will select the forum which promises most benefits and the most favourable outcome from the victim’s point of view.17 The common negative attitude towards Forum Shopping18 is unjustified if certain aspects are preserved. In balancing the costs and benefits of bringing a private lawsuit, difficulties of proving the claim for damages make it economically unattractive to seek compensation before courts.19 By influencing the application of substantive and procedural provisions, claimants can take an active part in improving this risk-reward relationship. This underlines the argument that Forum Shopping can and will contribute to the improvement of private antitrust enforcement. Considering that all systems of private antitrust enforcement are at an early stage, the different national regimes can also be used as a testing ground to find out which approach is most effective and beneficial. 11

Vide supra Part 3 B.I.3. Vide supra Part 2 B.I. 13 Vide supra Part 2 C.II. – VI. 14 Vila Costa, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 17 (23). 15 Bell, Forum Shopping and Venue in Transnational Litigation, para. 6.01. 16 Report on the Convention on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters and to the Protocol on its interpretation by the Court of Justice of 9 October 1978, OJ (1979) C 59 p. 71 (97). 17 Bell, Forum Shopping and Venue in Transnational Litigation, para. 6.01. 18 See for instance Fawcett, 35 N Ir Legal Q (1984), p. 142 (144 et seq.); Danov, Jurisdiction and Judgements in Relation to EU Competition Law Claims, p. 172 et seq.; Unberath/Cziupka, in: Rauscher, EuZPR/EuIPR, Art 6 Rom II-VO paras. 72 et seq.; Brkan, 28 World Competition (2005), p. 479 (487); Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 48, 49, 51, 53. 19 Commission Staff Working Paper accompanying the White Paper, para. 6. 12

A. Suggestions for Legal Reform

167

Guiding ideas are that jurisdictional rules should be predictable, comprehensible and suited for litigation over claims for damages arising from anti-competitive conduct. Several forums should be available for claimants to weigh the benefits and disadvantages. Nevertheless, courts must be well-placed to hear the claim and therefore have a link to the dispute and the affected market. The strong inclination of smaller undertakings to sue in their Home State and the consumers’ and small firms’ dependence on collective actions must also be appreciated when a reform is initiated.

II. Legal Reform of Art 2 Brussels I20 With regard to Art 2 Brussels I, the legislator can facilitate antitrust damages actions by granting claimants the possibility of bringing the action in the courts of the place where they are domiciled. Though Art 2 (1) Brussels I is not always well-suited to confer jurisdiction in cross-border EU antitrust law disputes,21 such a fundamental approach must be rejected. Considering the benefits of Forum Shopping, the mere inclination to claim in the home forum is not beneficial. Additionally, the introduction of a claimant’s venue as basic rule would mess up the whole jurisdictional system in civil and commercial matters.22

III. Legal Reform of Contract-Based Jurisdiction23 1. Reform Suggestions for Art 5 (1) Brussels I24 Jurisdiction for claims for damages originating from a contractual relationship can be based on Art 5 (1) Brussels I.25 Its application facilitates proceedings by the link between the court and the place of performance.26 Additionally, Art 5 (1) Brussels I allows claimants to choose between forums so as to benefit from differences between national laws and even, often, to bring the action in the home forum. The introduction of Art 5 (1) (b) Brussels I benefits claimants.27 However, there are still scenarios in which jurisdiction with regard to contract-based antitrust claims 20

Vide supra Part 4 C. with references. Vide supra Part 4 C.II. 22 Vide supra Part 4 C.IV. 23 Vide supra Part 4 D. with references. 24 Vide supra Part 4 D.II. with references. 25 Vide supra Part 4 D.II.2.c) with further references concerning the opinion that all antitrust damages actions are characterised as tortious. 26 Court of Justice of the European Union, Judgment of 6 October 1976, Industrie Tessili Italiana Como v Dunlop AG, Case 12-76 ECR 1976 p. 1473 para. 13. 27 Vide supra Part 4 D.II.3.b). 21

168

Part 6: Summary, Conclusion, Policy

is determined by Art 5 (1) (a) Brussels I.28 Assessing jurisdiction is hampered, as the determination of the place of performance is made by reference to the law applicable under the conflict-of-law rules of the court seised.29 The legislator should reform Art 5 (1) Brussels I and introduce autonomous definitions of the place of performance for all types of contracts or at least for those which are relevant in cross-border antitrust law actions such as licensing agreements. Art 5 (1) (a) Brussels I should also be amended in order to make sure that it also covers actions for a declaration that an antitrust law infringing contract is void. The provision could state that: “A person domiciled in a Member State may, in another Member State, be sued in matters relating to a contract and its existence, in the courts of the place of performance of the obligation in question; the same court shall be competent for an action for a declaration that a contractual obligation is void”. Additionally, claimants should have the opportunity to bring non-contractual claims for damages under Art 5 (1) Brussels I, together with a contractual claim seeking a declaration of the nullity of the contract. Indeed, the problem is superfluous if contractual damages claims in antitrust cases are characterised as such.30 However, to avoid the unsatisfactory outcome that two courts have jurisdiction for two claims which should be heard together, amending Art 5 (1) Brussels I is necessary. The legislator should explicitly introduce a broad jurisdiction of the courts of the place of performance of the obligation in question for matters relating to contract and tort if both are connected on the facts. 2. Reform Suggestions for Art 6 (1) Brussels I31 Art 6 (1) Brussels I and the opportunity thereby created to sue several, or even all, cartelists in one place32 facilitates proceedings and reduces costs. It also provides the opportunity to benefit from different national provisions beneficial to the claimant by opting for the lex fori.33 The fact that claimants can sue several defendants based on contract and on tort34 is another benefit. This illustrates that Art 6 (1) Brussels I in its current version is already a promising and valuable approach to achieve compensation for antitrust victims. Nevertheless, introducing into Art 6 (1) Brussels I a requirement that: “… the claim against the anchor defendant should not be mani-

28

Vide supra Part 4 D.II.3.c)cc). Vide supra Part 4 D.II.3.a). 30 Vide supra Part 4 D.II.5.a). 31 Vide supra Part 4 D.IV. with references. 32 Vide supra Part 4 D.IV.1.a); see Fawcett, 44 ICLQ (1995), p. 744 (749). 33 Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 73. 34 Federal Court of Justice, Decision of 30 November 2009, EuZW (2010), p. 959 paras. 8 et seq. 29

A. Suggestions for Legal Reform

169

festly inadmissible or unfounded”35 would be a proper way, capable of avoiding abusive Forum Shopping. Additionally, Art 6 (1) Brussels I must be amended in order to provide also a basis for claims against defendants domiciled outside the Union.36 3. Reform Suggestions for Arts 15 et seq. Brussels I37 Despite being granted the additional possibility of claiming for damages in the courts of the place where the consumers are domiciled, consumers currently remain uncompensated on most occasions.38 One reason is that consumers require mechanisms to bundle their claims. The legislator should therefore extend the benefits of Art 16 (1) Brussels I to consumer associations and classes of consumers. The legislator should amend Art 16 (1) Brussels I as follows: “A consumer, an association acting on behalf of the consumers or a class representing consumers may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts of the place where the consumer is domiciled”. A way to let consumers benefit from collective redress mechanisms, without harmonisation, is to extend the choice of forums to those jurisdictions which provide for such tools. Arts 15 et seq. Brussels I should be added a provision stating that: “Consumer associations, bringing representative actions for antitrust damages claims, and classes, acting on behalf of consumers who have been harmed, can initiate proceedings in those States which grant the procedural and substantive prerequisites”. The Commission should therefore draft a list of all regimes with adequate mechanisms of class and representative actions. Lastly, Art 16 (1) Brussels I should be amended in order to be a basis for all claims brought by a consumer or on behalf of consumers, irrespective of the nature of the claim. The benefits of Arts 15 et seq. Brussels I should not be limited to contractual damages claims, taking into account especially that consumers will usually bring tortious damages claims. 4. Reform Suggestions for Art 23 Brussels I39 The opportunity of choosing a jurisdiction combined with the protection of consumers40 illustrates that Art 23 Brussels I can be beneficial to claimants.41 Nevertheless, this works both ways as the availability of several forums can also be taken by choice of court clauses. One solution to avoid this would be to widen the 35

Wilderspin, in: Basedow/Francq/Idot, International Antitrust Litigation, p. 41 (53). Mankowski, Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, p. 78; vide supra Part 4 D.IV.3. 37 Vide supra Part 4 D.V. with references. 38 White Paper on Damages actions, p. 4. 39 Vide supra Part 4 D.VI. with references. 40 See Art 17 Brussels I. 41 Vide supra Part 4 D.VI.2. 36

170

Part 6: Summary, Conclusion, Policy

scope of Art 17 Brussels I or rather to have a similar provision for small- and medium-sized undertakings. Art 23 Brussels I could also be amended in order to forbid the grant of exclusive jurisdiction in antitrust damages litigation.

IV. Legal Reform of Tort-Based Jurisdiction42 The forum delicti commissi is more appropriate for deciding the case than the courts of the defendant’s domicile, especially on the grounds of proximity.43 As the place where an anti-competitive agreement has been concluded, where it has been implemented, or the seat of the cartelists can be regarded as the place of acting, antitrust claimants are given a great variety of forums to bring an action and centralise damages claims at the place of conclusion.44 These forums as well as the one at the place of damage are all linked to the market and the anti-competitive conduct. They allocate jurisdiction to adequate courts which are often even at the domicile of purchasers, clients and distributors. A legislative reform is not necessary as interpretation and case-law clarify the aspects presented and allow Forum Shopping. The only disadvantage shown of Art 5 (3) Brussels I is that a potential competitor who considers taking action to achieve compensation for damage arising out of the effects of anti-competitive conduct on his ability to enter a certain market,45 may claim damages in each Member State.46 This would lead to unrestricted Forum Shopping in such proceedings.47 This situation can be avoided by extending the “Shevill-rule” to antitrust cases.48

V. Legal Reform of Lis Pendens49 Provisions on lis pendens and related actions are a further significant aspect of the private international law rules determining jurisdiction. Arts 27 et seq. Brussels I are basically an adequate solution to avoid parallel proceedings and irreconcilable judgments.50 In particular, Art 28 Brussels I as a catch-all provision plays a con42

Vide supra Part 4 E. with references. Court of Justice of the European Union, Judgment of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, Case C-167/00, ECR 2002 p. I-8111 para. 46. 44 Vide supra Part 4 E.II.3.a). 45 Withers, JBL (2002), p. 250 (261). 46 Withers, JBL (2002), p. 250 (261). 47 Vide supra Part 4 E.II.4.b); Ashton/Vollrath, ZWeR (2006), p. 1 (8); see also Withers, JBL (2002), p. 250 (261 et seq.). 48 Withers, JBL (2002), p. 250 (262); vide supra Part 4 E.II.2.c). 49 Vide supra Part 5 with references. 50 Vide supra Part 5 B.I. 43

B. Legal Policy/Leniency Programme

171

siderable role in antitrust damages litigation.51 Nevertheless, these provisions do not contribute to the allocation of jurisdiction to well-placed courts. From this point of view, it would be beneficial if “… the court first seised was entitled to decline jurisdiction in cases where agreement or practice has no substantial direct … effects on competition within the Member State”.52 Nevertheless, the introduction of the forumnon-conveniens doctrine is not an option due to the adverse consequences for private antitrust enforcement and because the same result can be reached by jurisdictional rules.53 An analysis suggests that negative declaratory proceedings initiated in certain forums can jeopardise the possibility of Forum Shopping for antitrust damages claimants. To stop such abusive behaviour, the legislator should introduce a provision into Arts 27 et seq. Brussels I which allows courts seised to examine whether the action is merely abusive and has the intention only of depriving the claimants of their choice of forums.54

B. Legal Policy/Leniency Programme The ideas presented for legal reform focussing on jurisdictional rules are just one part of an overall process which is necessary to guarantee the effectiveness of private antitrust damages claims. However, any improvement of the damages claims system might have a negative effect on the European Commission’s leniency programme.

I. Significance of the Leniency Programme In 2006 the European Commission published a notice55 which sets out the framework for rewarding cooperation to stop agreements and concerted practices between competitors coordinating their competitive behaviour on the market.56 The European Commission grants immunity from any fine which would otherwise have been charged if the cartelist is the first to submit evidence which enables it to carry out a targeted inspection.57 To qualify for a reduction of fines, “… an undertaking must 51

Vide supra Part 5 B.II.2. Danov, Jurisdiction and Judgments in Relation to EU Competition Law Claims, p. 129. 53 Vide supra Part 5 C.I.2. 54 Vide supra Part 5 C.II.3; see Art 29 (2) Brussels I Recast for the inadequate measures of the legislator. 55 Commission Notice on Immunity from fines and reduction of fines in cartel cases of 8 December 2006, OJ (2006) C 298 p. 17 (Commission Notice on Immunity from fines and reduction of fines). 56 Commission Notice on Immunity from fines and reduction of fines, para. 1. 57 Commission Notice on Immunity from fines and reduction of fines, para. 8 a). 52

172

Part 6: Summary, Conclusion, Policy

provide the European Commission with evidence of the alleged infringement which represents significant added value with respect to the evidence already in the European Commission’s possession”.58 Leniency applications are the most important instrument for public authorities to detect infringements of antitrust law.59 Between the adoption of the 1996 Leniency Notice and 2002, the European Commission has taken decisions in sixteen cartel cases in which undertakings cooperated.60 Between 2002 and the end of 2005 the European Commission received 167 applications for leniency. 87 of these applications were requests for immunity and eighty were requests for a reduction of fines.61 Since the introduction of the 2002 Notice the quota for detection due to leniency applicants is one hard core cartel a month. The use of the leniency programme has become the rule.62 The incentive to apply is very high.63

II. Dependence of Private Enforcement on Leniency Both litigation over damages claims and leniency constitute the essential pillars of an effective system of antitrust enforcement.64 However, it should be recalled that private antitrust enforcement only consists of follow-on actions.65 It is therefore in the interest of claimants to benefit from the investigation of the European Commission 58

Commission Notice on Immunity from fines and reduction of fines, para. 24. Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 552; Zagrosek, Kronzeugenregelungen im U.S.-amerikanischen, europäischen und deutschen Recht der Wettbewerbsbeschränkungen, p. 99; Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (218). 60 Press releases RAPID, Question & Answer, MEMO/02/23, 13 February 2002, available at http://europa.eu/rapid/press-release_MEMO-02-23_en.htm (last accessed 14 February 2014); the decisions which were adopted include Alloy Surcharge, British Sugar, Pre-insulated pipes, Greek Ferries, Seamless Steel Tubes, FETTCSA, Lysine, Graphite Electrodes, SAS-Maersk Air, Sodium Gluconate, Vitamins, Belgian Brewers, Luxembourg Brewers, Citric acid, Zinc phosphate and Carbonless paper; all sixteen cases together represent a total amount of fine of E 2.240 million; see Zagrosek, Kronzeugenregelungen im U.S.-amerikanischen, europäischen und deutschen Recht der Wettbewerbsbeschränkungen, p. 99. 61 Press releases RAPID, Competition: Commission proposes changes to the Leniency Notice – frequently asked questions, MEMO/06/357, 29 September 2006, available at http:// europa.eu/rapid/press-release_MEMO-06-357_en.htm?locale=en (last accessed 14 February 2014); see also Zagrosek, Kronzeugenregelungen im U.S.-amerikanischen, europäischen und deutschen Recht der Wettbewerbsbeschränkungen, p. 99. 62 Zagrosek, Kronzeugenregelungen im U.S.-amerikanischen, europäischen und deutschen Recht der Wettbewerbsbeschränkungen, p. 99 with further references. 63 See a study on the effects of reduced fines for firms cooperating with the antitrust authority, Motta, Competition Policy, p. 195 et seq. 64 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (218). 65 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (63). 59

B. Legal Policy/Leniency Programme

173

and consequently from leniency applications. These interests obviously outweigh the interest in fining the key witnesses.66 Otherwise, the whole system of damages actions would face an existential threat and would probably collapse. Therefore, when considering the introduction or modification of instruments for the benefit of claimants, the potential harm these mechanisms might have on the effectiveness of the programme have to be kept in mind.67 The threat of damages claims to leniency has also been discussed by the solicitors interviewed. On five out of eleven occasions, the interview respondents in Germany and Brussels stated that defendants still apply for leniency bearing in mind that there are follow-on actions.68 On three occasions it was argued that the risk of damages claims has a high significance when advising a client. The majority of interviewees therefore admitted to be very reluctant when advising to apply for leniency if the market is likely to trigger follow-on claims.69

III. Collision Points of Leniency and Cartel Damages Claims Total immunity from fines is usually only granted to the firm which informs the authority first, the one which “blows the whistle”.70 If the “whistle-blower” is not granted full immunity, he will be exposed to a fine which might also trigger damages claims. The compensation might – due to joint and several liability – far outweigh the reduction of the fine.71 Parties to anti-competitive agreements are liable for the entire damage caused by these agreements.72 This means that a victim may claim his entire damage not only from his contractual partner, but also from any of the parties to the agreement.73 To facilitate proceedings, the overwhelming majority of solicitors interviewed advises to sue explicitly that party of the cartel that filed for leniency and admitted the wrongdoing.74 Another incentive to sue the key witness is the fact that in 66

Commission Notice on Immunity from fines and reduction of fines, para. 3. Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (226); Mundt, in: Frankfurter Allgemeine Zeitung Nr 130 of 8 June 2013, p. 14. 68 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (72). 69 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (73). 70 See the notion at Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (221). 71 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (221). 72 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 396; Emmerich, in: Immenga/Mestmäcker, Wettbewerbsrecht Volume 2 GWB, § 33 GWB para. 43; Commission Staff Working Paper accompanying the White Paper, para. 281. 73 Commission Staff Working Paper accompanying the White Paper, para. 281. 74 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (64 et seq.) 67

174

Part 6: Summary, Conclusion, Policy

this case “normally no appeal is pending”75. The applicant does not have an “interest in challenging the authority’s decision”76 and it is the first to become final.77 This means that national courts are only bound by the Commission’s findings concerning the applicant. After having compensated the victims, the key witness must seek contribution from the other infringers.78 He bears additional risks, especially in the case of their insolvency.79 Another problem might be that a cartelist filing for leniency has to provide the European Commission with incriminating documents.80 If the applications were available for claimants in follow-on actions, proving a claim would be facilitated. Such a disclosure would further reduce the attractiveness of leniency and its efficiency. These scenarios illustrate that applicants might find themselves in a situation that is worse than if they had not cooperated with the European Commission.

IV. Ideas for Legal Reform Leniency applicants might not be able to benefit from incentives granted by the European Commission in return for cooperation if damages claims increase. The proposed legal reform in this thesis will even add fuel to the fire between cartel damages claims and the leniency programme. In particular, the availability of punitive damages and the establishment of collective redress mechanisms will contribute to the award of much higher damages. Due to the bundling of relatively small claims cartelists will have to compensate damage that has not been claimed de lege lata. Victims who are not aware of an infringement will be informed so as to join a class action or to be represented by a consumer association. Additional procedural and substantive benefits will contribute to a much more efficient system of private enforcement.81 However, a decrease in the number of leniency applications will destroy all achievements and pose an existential threat to the private antitrust enforcement system. Any reform has to respect the complementary functions of private and public enforcement.

75 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (65). 76 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (65). 77 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (221). 78 See Sections 830, 840 (1), 426 (1) of the German Civil Code. 79 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (221). 80 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (221). 81 Vide supra Parts 2 and 3.

B. Legal Policy/Leniency Programme

175

1. Civil Immunity for Leniency Applicants An approach to ensure the functionality of leniency programmes is to limit the civil liability of successful key witnesses. Four out of eleven German interviewees agree on this idea.82 However, this approach does not fit European civil law systems.83 Additionally and more significantly, antitrust damages claimants would be deprived of their right to compensation.84 This is wrong in terms of legal policy and of the objective of improving the situation of antitrust victims. The European Commission suggests limiting civil liability to claims by direct and indirect contractual partners.85 This could help to “… make the scope of damages to be paid by immunity recipients more predictable and more limited, without unduly sheltering them from civil liability for their participation in an infringement”.86 However, even this improvement for the key witness can result in enormous disadvantages for victims. If in a two-party-cartel the contractual partner of the damages claimant is insolvent and the other one files for leniency, the claimant cannot achieve any compensation.87 This is inconsistent with the establishment of a right to damages in the case of infringement of EU antitrust law.88 The European Commission recently took a step back and proposes that this limitation shall only be effective if the injured parties show that they are not capable of achieving compensation from the other firms involved in the infringement.89 This is a better solution in theory but will also result in difficulties for the victims. 2. Waiving Joint and Several Liability The European Commission proposes to remove joint liability from successful leniency applicants.90 This does not grant an additional financial reward to the successful leniency applicant, but makes sure that his liability is limited to a certain 82 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (73). 83 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (223). 84 Böge/Ost, ECLR (2006), p. 197 (198); Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (223). 85 White Paper on Damages actions, p. 10; Commission Staff Working Paper accompanying the White Paper, para. 305; Böge/Ost, ECLR (2006), p. 197 (198) are also in favour of this solution. 86 White Paper on Damages actions, p. 10. 87 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 554. 88 Court of Justice of the European Union, Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, Case C-453/99, ECR 2001 p. I-6297 paras. 26 et seq. 89 Art 11 (2) Proposal for a Directive, p. 37. 90 Green Paper on Damages actions, option 30; Commission Staff Working Paper accompanying the White Paper, para. 280.

176

Part 6: Summary, Conclusion, Policy

share of the damage.91 The recovery of damages from leniency applicants would be limited to the damage that can be attributed to the defendant.92 Limiting the liability would reduce the risks of the “whistle-blower” and benefit all other leniency applicants who do not have to seek contribution from the other cartelists.93 However, the exclusion of joint liability for leniency applicants means a drawback for the private enforcement of EU antitrust law. Claimants would have to bear the risk of their contractual partner’s insolvency if all other cartelists were insolvent or acted as leniency applicants.94 This again is wrong in terms of legal policy aimed at improving the situation of antitrust victims.95 A similar approach is to enable the key witness to claim his entire damage from the other cartelists and thus not to have any damage.96 However, in this scenario the other cartelists would have a liability that exceeds their contribution and the leniency applicant cannot erase his contribution to the conspiracy in the past.97 This solution should nevertheless be considered as it does not mean a drawback for private antitrust enforcement and comes to fair results. 3. Restricting Pre-Trial Disclosure and Access to Files Excluding the discoverability of leniency applications is another way to benefit leniency applicants. The European Commission declared that it “… will never disclose to parties in private actions for damages any corporate statements it receives in the context of its Leniency Notice”.98 The German Federal Cartel Office also stated that “[w]here an application for immunity or reduction of a fine has been filed [it] shall use the statutory limits of its discretionary powers to refuse applications by private third parties for file inspection … insofar as the leniency application and the evidence provided by the applicant are concerned”.99 These declarations are not legally binding and therefore successful leniency applicants cannot rely on these statements. Additionally, the Court of Justice of the European Union ruled that in the absence of binding European rules on leniency and access to documents relating to 91

Commission Staff Working Paper accompanying the White Paper, para. 280. See in the US context and the 2004 Antitrust Criminal Penalty and Reform Act Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (223). 93 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (223); Commission Staff Working Paper accompanying the White Paper, para. 282. 94 Böge, in: Basedow, Private Enforcement of EC Competition Law, p. 217 (223 et seq.) 95 Bien, EuZW (2011), p. 889 (890); Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 557 et seq. 96 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 558 et seq.; Kersting, ZWeR (2008), p. 252 (266). 97 Bien, EuZW (2011), p. 889 (890). 98 Commission Staff Working Paper accompanying the White paper, para. 299. 99 Notice no. 9/2006 of the Bundeskartellamt on the immunity from and reduction of fines in cartel cases – Leniency Programme – of 7 March 2006, para. 22. 92

B. Legal Policy/Leniency Programme

177

leniency procedures, national courts must weigh the claimant’s interest in disclosure against the significance of preserving the functionality of the leniency programme.100 Nevertheless, the controversy is not relevant as the European Commission only collects copies and not the original documents needed for private litigation. The leniency applicant makes an oral application which is then transcribed.101 Additionally, the European Commission’s declaration of infringement admitted by the leniency applicant is binding for a judge in litigation over follow-on damages claims.102 Access to leniency applications is therefore not necessary.103 With regard to the proof of the extent of an illicit price adjustment the leniency application is useless. Applicants do not have to give full particulars on this aspect.104 Also the Commission’s proposal for a Directive provides that courts cannot order a party to disclose leniency corporate statements.105 This makes legislative reform with regard to disclosure superfluous. 4. The Way Ahead Pre-trial disclosure and access to files of claimants do not seem to be a major hurdle for leniency applicants. The decisive disadvantage is that leniency applicants are the primary target for follow-on actions. Combined with the increasing chance of success of private actions against anti-competitive conduct, the problem is simple: damages claims will become much more dangerous for defendants than the fines imposed by the European Commission. An economical cost-benefit-analysis will demonstrate that applying for leniency is not an option due to negative financial consequences. Such a situation has to be avoided. Without leniency there is no detection of cartels and therefore damages claims are virtually impossible. However, most of the proposed solutions to benefit successful leniency applicants are not convincing. The legislator should consider enabling the key witness to claim his entire damage from the other cartelists.106

100 Court of Justice of the European Union, Judgment of 14 June 2011, Pfleiderer AG v Bundeskartellamt, Case C-360/09, ECR 2011, p. 0 paras. 23 et seq.; Webber, in: Danov/ Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 215 (216). 101 Kammin/Becker, in: Danov/Becker/Beaumont, Cross-Border EU Competition Law Actions, p. 61 (65). 102 See Section 33 (4) of the German Act against Restraints of Competition. 103 Bien, EuZW (2011), p. 889. 104 Bien, EuZW (2011), p. 889. 105 Art 6 (1) (a) Proposal for a Directive, p. 34. 106 Meessen, Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, p. 558 et seq.; Kersting, ZWeR (2008), p. 252 (266).

References Ashton, David/Vollrath, Christian: Choice of Court and Applicable Law in Tortious Actions for Breach of Community Competition Law, in: ZweR 2006, page 1 – 27 Baker, Donald: Punishment for Cartel Participants in the US: A Special Model? in: BeatonWells, Caron/Ezrachi, Ariel (ed.), Criminalising Cartels – Critical Studies of an International Regulatory Movement, Oxford and Portland 2013, page 27 – 44 Basedow, Jürgen: Introduction, in: Basedow, Jürgen (ed.), Private Enforcement of EC Competition Law, Alphen aan den Rijn 2007, page 1 – 5 – Jurisdiction and Choice of Law in the Private Enforcement of EC Competition Law, in: Basedow, Jürgen (ed.), Private Enforcement of EC Competition Law, Alphen aan den Rijn 2007, page 229 – 253 – Entwicklungslinien des internationalen Kartellrechts – Ausbau und Differenzierung des Auswirkungsprinzips, in: NJW 1989, page 627 – 638 – International Cartels and the Place of Acting under Art 5 (3) of the Brussels I Regulation, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 31 – 39 Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence: Introduction, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 1 – 13 Becker, Florian: Application of Community Law by Member States’ public authorities: Between Autonomy and Effectiveness, in: 44 CMLR 2007, page 1035 – 1056 Becker, Florian/Kammin, Julian: Die Durchsetzung von kartellrechtlichen Schadensersatzansprüchen: Rahmenbedingungen und Reformansätze, in: EuZW 2011, page 503 – 509 Becker, Rainer: Kartellrechtliche Schadensersatzklagen à l’américaine?, in: Möschel, Wernhard/Bien, Florian (ed.), Kartellrechtsdurchsetzung durch private Schadenersatzklagen?, Baden-Baden 2010, page 37 – 70 Bell, Andrew: Forum Shopping and Venue in Transnational Litigation, Oxford 2003 Bergmann, Helmut/Fiedler, Lilly: Anspruchsberechtigung indirekter Abnehmer und Passingon defense: Private Kartellrechtsdurchsetzung in Deutschland, in: BB 2012, page 206 – 210 Beschorner, Patrick F. E./Hüschelrath, Kai: Ökonomische Aspekte der privaten Durchsetzung des Kartellrechts, in: Möschel, Wernhard/Bien, Florian (ed.), Kartellrechtsdurchsetzung durch private Schadenersatzklagen?, Baden-Baden 2010, page 9 – 23 Bien, Florian: Überlegungen zu einer haftungsrechtlichen Privilegierung des Kartellkronzeugen, in: EuZW 2011, page 889 – 891

References

179

Böge, Ulf: Leniency Programs and the Private Enforcement of European Competition Law, in: Basedow, Jürgen (ed.), Private Enforcement of EC Competition Law, Alphen aan den Rijn 2007, page 217 – 226 Böge, Ulf/Ost, Konrad: Up and running, or is it? Private enforcement – the situation in Germany and policy perspectives, in: ECLR 2006, page 197 – 205 Brkan, Maja: Procedural Aspects of Private Enforcement of EC Antitrust Law: Heading Toward New Reforms?, in: 28 World Competition 2005, page 479 – 506 Bulst, Friedrich Wenzel: Internationale Zuständigkeit, anwendbares Recht und Schadensberechnung im Kartelldeliktsrecht, in: EWS 2004, page 403 – 410 Buxbaum, Hannah L.: Private Enforcement of Competition Law in the United States – of Optimal Deterrence and Social Costs, in: Basedow, Jürgen (ed.), Private Enforcement of EC Competition Law, Alphen aan den Rijn 2007, page 41 – 60 Buxbaum, Hannah L./Michaels, Ralf: Jurisdiction and Choice of Law in International Antitrust Law – A US Perspective, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 225 – 244 Calliess, Christian/Ruffert, Matthias (ed.): EUV/AEUV Kommentar, Das Verfassungsrecht der Europäischen Union mit Europäischer Grundrechtecharta, Fourth Edition, Munich 2011 Cavanagh, Edward D.: The Private Antitrust Remedy: Lessons from the American Experience, in: 41 Loy U Chi LJ 2009 – 2010, page 629 – 649 Chieu, Tiffany: Class Actions in the European Union?: Importing Lessons Learned from the United States’ Experience into European Community Competition Law, in: 18 Cardozo J Int’l & Comp L 2010, page 123 – 157 Coffee, John C.: The Regulation of Entrepreneurial Litigation: Balancing Fairness and Efficiency in the Large Class Action, in: 54 U Chi L Rev 1987, page 877 – 937 Collins, Philip: What are the problems with EC antitrust damage actions in Europe? Does the private pillar require reinforcement?, in: 3 Competition L Int’l 2007, page 53 – 60 Danov, Mihail: Jurisdiction and Judgments in Relation to EU Competition Law Claims, Oxford and Portland 2011 – The Brussels I Regulation: Cross-Border Collective Redress Proceedings and Judgments, in: JPIL 2010, page 359 – 393 Danov, Mihail/Becker, Florian: Concluding Remarks on Promoting Regulatory Competition: Issues to be Addressed, in: Danov, Mihail/Becker, Florian/Beaumont, Paul (ed.), CrossBorder EU Competition Law Actions, Oxford and Portland 2013, page 81 – 93 Dutta, Anatol: Das Statut der Haftung aus Vertrag mit Schutzwirkung für Dritte, Praxis des Internationalen Privat- und Verfahrensrechts, in: IPRax 2009, page 293 – 299 Elhauge, Einer/Geradin, Damien: Global Competition Law and Economics, Second Edition, Oxford and Portland 2011 Fallon, Marc/Francq, Stéphanie: Private Enforcement of Antitrust Provisions and the Rome I Regulation, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford 2011, page 63 – 90

180

References

Fawcett, James: Forum Shopping, in: 35 N Ir Legal Q 1984, page 142 – 152 – Multi-party litigation in private international law, in: 44 ICLQ 1995, page 744 – 770 Fiedler, Lily: Class Actions zur Durchsetzung des europäischen Kartellrechts: Nutzen und mögliche prozessuale Ausgestaltung von kollektiven Rechtsschutzverfahren im deutschen Recht zur privaten Durchsetzung des europäischen Kartellrechts, Tübingen 2010 Francq, Stéphanie/Wurmnest, Wolfgang: International Antitrust Claims under the Rome II Regulation, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 91 – 129 Geimer, Reinhold: Streitgenossenzuständigkeit und forum delicti commissi, Anmerkung zu EuGH, Urteil vom 27-09-1988 – Rs 189/87, in: NJW 1988, page 3089 – 3090 – Die Gerichtspflichtigkeit des Beklagten nach Art. 5 Nr. 1 und Nr. 3 EuGVÜ bei Anspruchskonkurrenz, in: IPRax 1986, page 80 – 82 Geimer, Reinhold/Schütze, Rolf A. (ed.): Europäisches Zivilverfahrensrecht Kommentar, 3. Auflage, Munich 2010 Gilles, Myriam/Friedman, Gary: Exploding the Class Action Agency Costs: The Social Utility of Entrepreneurial Lawyers, in: 155 U Pa L Rev 2006, page 103 – 164 Gottwald, Peter: Europäische Gerichtspflichtigkeit kraft Sachzusammenhangs, zu EuGH, 27. 9. 1988 – RS 189/87, in: IPRax 1989, page 272 – 274 Gsell, Beate: Autonom bestimmter Gerichtsstand am Erfüllungsort nach der Brüssel I-Verordnung, in: IPRax 2002, page 484 – 491 Hempel, Rolf: Privater Rechtsschutz im Kartellrecht, Eine rechtsvergleichende Analyse, Baden-Baden 2002 Hensler, Deborah: Revisiting the Monster: New Myths and Realities of Class Action and Other Large Scale Litigation, in: 11 Duke J Comp & Int’l L 2001, page 179 – 213 Hess, Burkhard: Die allgemeinen Gerichtsstände in der Brüssel I-Verordnung, in: Hau, Wolfgang/Schmidt, Hubert (ed.), Facetten des Verfahrensrechts: liber amicorum Walter F. Lindacher zum 70. Geburtstag, Cologne 2007, page 53 – 64 Hickey, Anna: Schadensersatzansprüche Privater bei Verstößen gegen das EG-Wettbewerbsrecht – Optimierung nach dem US-“Antitrust Damages” Modell?, in: 11 Trinity CL Rev 2008, page 138 – 154 Hodges, Christopher: Objectives, mechanisms and policy choices in collective enforcement and redress, in: Steele, Jenny/van Boom, Willem H. (ed.), Mass Justice, Challenges of Representation and Distribution, Cheltenham 2011, page 101 – 115 Idot, Laurence: Access to Evidence and Files of Competition Authorities, in: Basedow, Jürgen/ Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 259 – 287 – Private Enforcement of Competition Law – Recommendations Flowing from the French Experience, in: Basedow, Jürgen (ed.), Private Enforcement of EC Competition Law, Alphen aan den Rijn 2007, page 85 – 106 Immenga, Ulrich/Mestmäcker, Ernst-Joachim (ed.): Wettbewerbsrecht, Volume 2 GWB, Kommentar zum Deutschen Kartellrecht, Fourth Edition, Munich 2007

References

181

– (ed.): Wettbewerbsrecht, Volume 1 EU, Kommentar zum Europäischen Kartellrecht, Fifth Edition, Munich 2012 Jayme, Erik/Kohler, Christian: Europäisches Kollisionsrecht 1999 – Die Abendstunde der Staatsverträge, in: IPRax 1999, page 401 – 413 Jickeli, Joachim: Der Binnenmarkt im Schatten des Subsidiaritätsprinzips: Erste Weichenstellungen in der Rechtsprechung, in: JZ 1995, page 57 – 64 – Freiheitsschutz und Effizienz als Zielsetzungen des Europäischen Kartellrechts, in: Schliesky, Utz/Ernst, Christian/Schulz, Sönke E. (ed.), Die Freiheit des Menschen in Kommune, Staat und Europa, Festschrift für Edzard Schmidt-Jortzig, Heidelberg 2011, page 713 – 729 Jones, Alison/Surfin, Brenda: EU Competition Law, Fourth Edition, Oxford 2011 Juenger, Friedrich K.: Forum Shopping, Domestic and International, in: 63 Tulane Law Review 1989, page 553 – 574 Kammin, Julian/Becker, Florian: Cross-Border EU Competition Litigation: Qualitative Interviews from Germany, in: Danov, Mihail/Becker, Florian/Beaumont, Paul (ed.), Cross-Border EU Competition Law Actions, Oxford and Portland 2013, page 61 – 79 Kersting, Christian: Perspektiven der privaten Rechtsdurchsetzung im Kartellrecht, in: ZWeR 2008, page 252 – 270 Kleinknecht, Andreas: Die verbraucherschützenden Gerichtsstände im deutschen und europäischen Zivilprozessrecht, Berlin 2007 Komninos, Assimakis P.: EC Private Antitrust Enforcement: Decentralised Application of EC Competition Law by National Courts, Oxford and Portland 2008 Kropholler, Jan/Hein, Jan von (ed.): Europäisches Zivilprozessrecht, Kommentar, Ninth Edition, Frankfurt on the Main 2011 Kropholler, Jan/Hinden, Michael von: Die Reform des europäischen Gerichtsstands am Erfüllungsort (Art. 5 Nr. 1 EuGVÜ), in: Schack, Haimo (ed.), Gedächtnisschrift für Alexander Lüderitz, Munich 2000, page 401 – 414 Lawrence, Jon: Seeking the Perfect Balance: Some Reflections on the Commission’s Green Paper on Damages Actions for Breach of the EC Antitrust Rules, Eur Competition L Ann 2006, page 457 – 476 Leible, Stefan: Der Erfüllungsort iSv Art. 5 Nr. 1 lit. b Brüssels I-VO – ein Mysterium?, in: Bernreuther, Jörn/Freitag, Robert/Leible, Stefan/Sippel, Harald/Wanitzek, Ulrike (ed.), Festschrift für Ulrich Spellenberg zum 70. Geburtstag, Munich 2010, page 451 – 465 Lindacher, Walter F.: Internationales Wettbewerbsverfahrensrecht, Cologne 2009 Lüderitz, Alexander: „Verbraucherschutz“ im internationalen Vertragsrecht – ein Zuständigkeitsproblem, in: Jayme, Erik/Kegel, Gerhard/Lutter, Marcus (ed.), Ius inter nationes, Festschrift für Stefan Riesenfeld aus Anlaß seines 75. Geburtstages, Heidelberg 1983, page 147 – 163 Mankowski, Peter: Das neue Internationale Kartellrecht des Art. 6 Abs. 3 Rom II-VO, in: RIW 2008, page 177 – 193

182

References

– Schadensersatzklagen bei Kartelldelikten – Fragen des anwendbaren Rechts und der internationalen Zuständigkeit, in: Zentrum für Europäisches Wirtschaftsrecht der Rheinischen Friedrich-Wilhelms-Universität Bonn – Vorträge und Berichte Nr. 194, Bonn 2012 Mansel, Heinz-Peter: Gerichtliche Prüfungsbefugnis im forum delicti, in: IPRax 1989, page 84 – 87 Maunz, Theodor/Dürig, Günter (ed.): Grundgesetz-Kommentar, Sixty-Ninth Edition, Munich 2013 McLachlan, Campbell: Lis Pendens in International Litigation, The Hague 2009 Meessen, Gero: Der Anspruch auf Schadensersatz bei Verstößen gegen EU-Kartellrecht, Tübingen 2011 Micklitz, Hans-W./Rott, Peter: Vergemeinschaftung des EuGVÜ in der Verordnung (EG) Nr. 44/2001, in: EuZW 2011, page 325 – 334 Motta, Massimo: Competition Policy, Theory and Practice, New York 2004 Mulheron, Rachel: The Case for an Opt-Out Class Action for European Member States: A Legal and Empirical Analysis, in: 15 Colum J Eur L 2008 – 2009, page 409 – 454 Musielak, Hans-Joachim (ed.): Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz, Tenth Edition, Munich 2013 Nagel, Heinrich/Gottwald, Peter: Internationales Zivilprozessrecht, Sixth Edition, Cologne 2007 Parsons, Michelle: European Class Actions, in: 4 SC J Int’l L & Bus 2007 – 2008, page 35 – 60 Pfeiffer, Thomas: Materialisierung und Internationalisierung im Recht der Internationalen Zuständigkeit, in: Schmidt, Karsten (ed.), 50 Jahre Bundesgerichtshof – Festgabe aus der Wissenschaft, Volume III, Munich 2006, page 617 – 643 Pheasant, John: Private Antitrust Damages in Europe: The Policy Debate and Judicial Developments, 21 Antitrust 2006, page 59 – 65 Poillot-Peruzzeto, Sylvaine/Lawnicka, Dominika: Relevance of the Distinction between the Contractual and Non-Contractual Spheres (Jurisdiction and Applicable Law), in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 131 – 157 Rauscher, Thomas: Internationaler Gerichtsstand des Erfüllungsorts – Abschied von Tessili und de Bloos, in: NJW 2010, page 2251 – 2254 – (ed.): Europäisches Zivilprozess- und Kollisionsrecht, Kommentar, Munich 2011 Rauscher, Thomas/Wax, Peter/Wenzel, Joachim (ed.): Münchener Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz und Nebengesetzen, Volume 1, Fourth Edition, Munich 2013 – (ed.): Münchener Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz und Nebengesetzen, Volume 3, Fourth Edition, Munich 2013 Reber, Ulrich: Die internationale gerichtliche Zuständigkeit bei grenzüberschreitenden Urheberrechtsverrletzungen, in: ZUM 2005, page 194 – 203

References

183

Reher, Tim: Specific Issues in Cross-Border EU Competition Law Actions Brought by Multiple Claimants in a German Context, in: Danov, Mihail/Becker, Florian/Beaumont, Paul (ed.), Cross-Border EU Competition Law Actions, Oxford and Portland 2013, page 159 – 165 Reynolds, William L.: The Proper Forum for a Suit: Transnational Forum Non Conveniens and Counter-Suit Injunctions in the Federal Courts, in: 70 Tex L Rev 1991 – 1992, page 1663 – 1714 Rodger, Barry: Competition Law Litigation in the UK Courts: A Study of all Cases 2005 – 2008 – Part 1, in: GCLR 2009, page 92 – 114 Roth, Wulf-Henning: Internationales Kartelldeliktsrecht in der Rom II-Verordnung, in: Baetge, Dietmar/von Hein, Jan/von Hinden, Michael (ed.), Richtige Ordnung: Festschrift für Jan Kropholler zum 70. Geburtstag, Tübingen 2008, page 623 – 649 Rubinfeld, Daniel L./Scotchmer, Suzanne: Contingent Fees for Lawyers: An Economic Analysis, in: 24 The Rand Journal of Economics 1993, page 343 – 356 Russell, Tiana Leia: Exporting Class Actions to the European Union, in: 28 BU Int’l LJ 2010, page 141 – 180 Säcker, Jürgen/Rixecker, Roland (ed.): Münchener Kommentar zum Bürgerlichen Gesetzbuch, Volume 5, Fifth Edition, Munich 2009 – (ed.): Münchener Kommentar zum Bürgerlichen Gesetzbuch, Volume 10, Fifth Edition, Munich 2010 Schack, Haimo: Vermögensbelegenheit als Zuständigkeitsgrund – exorbitant oder sinnvoll? § 23 ZPO in rechtsvergleichender Perspektive, in: ZZP 97 1984, page 46 – 68 – Internationales Zivilverfahrensrecht, Fifth Edition, Munich 2010 – BGB – Allgemeiner Teil, Thirteenth Edition, Heidelberg 2011 – Einführung in das US-amerikanische Zivilprozessrecht, Third Edition, Munich 2003 Schlosser, Peter F.: EU-Zivilprozessrecht Kommentar, Third Edition, Munich 2009 Scholl, Carl-Christian: Kollektiver Rechtsschutz im Kartellrecht, Eine rechtsvergleichende Untersuchung zum Private Enforcement im Kartellrecht, Frankfurt on the Main 2011 Scholz, Ulrich/Rixen, Gerrit: Die neue europäische Kollisionsnorm für außervertragliche Schuldverhältnisse aus wettbewerbsbeschränkendem Verhalten, in: EuZW 2008, page 327 – 332 Spellenberg, Ulrich: Das Europäische Gerichtsstands- und Vollstreckungsübereinkommen als Kern eines europäischen Zivilprozeßrechts, in: EuR 1980, page 329 – 352 Stadler, Astrid: Collective Action as an Efficient Means for the Enforcement of European Competition Law, in: Basedow, Jürgen (ed.), Private Enforcement of EC Competition Law, Alphen aan den Rijn 2007, page 195 – 213 Staudinger, Ansgar: Gewinnzusagen aus dem Ausland und die Frage der Zuständigkeitskonzentration im Europäischen Zivilprozessrecht, Anmerkung zum Urteil des Europäischen Gerichtshofs vom 11. Juni 2002, in: ZEuP 2004, page 767 – 782 Staudinger, Ansgar/Steinrötter, Björn: Europäisches Internationales Zivilverfahrensrecht: Alles “Brüssel”, oder was?, in: JA 2012, page 241 – 249

184

References

Streinz, Rudolf: Europarecht, Ninth Edition, Heidelberg 2012 Stürmer, Rolf: Duties of Disclosure and Burden of Proof in the Private Enforcement of European Competition Law, in: Basedow, Jürgen (ed.), Private Enforcement of EC Competition Law, Alphen aan den Rijn 2007, page 163 – 192 Tzakas, Dimitrios-Panagiotis: International Litigation and Competition Law: The Case of Collective Redress, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 161 – 189 van Gerven, Walter: Harmonization of Private Law: Do we need it?, in: 41 CMLR 2004, page 505 – 532 – Of Rights, Remedies and Procedures, in: 37 CMLR 2000, page 501 – 536 Vilà Costa, Blanca: How to Apply Articles 5 (1) and 5 (3) Brussels I Regulation to Private Enforcement of Competition Law: a Coherent Approach, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 17 – 29 Waelbroeck, Denis/Slater, Donald: The Commission’s Green Paper on Private Enforcement: “Americanization” of EC Competition Law Enforcement?, in: Eur Competition L Ann 2006, page 425 – 445 Weatherill, Stephen: Why harmonise?, in: Tridimas, Takis/Nebbia, Paolisa (ed.), European Union Law for the Twenty-First Century, Rethinking the New Legal Order, Volume 2 Internal Market and Free Movement Community Policies, Oxford and Portland 2004, page 11 – 32 Webber, James: Observations on the Implication of Pfleiderer for Leniency Programmes, in: Danov, Mihail/Becker, Florian/Beaumont, Paul (ed.), Cross-Border EU Competition Law Actions, Oxford and Portland 2013, page 215 – 222 Weidenbach, Gerorg/Saller, Michael: Das Weißbuch der Europäischen Kommission zu kartellrechtlichen Schadensersatzklagen, in: BB 2008, page 1020 – 1026 Whish, Richard: Competition Law, Sixth Edition, Oxford 2009 Wiedemann, Gerhard: Handbuch des Kartellrechts, Second Edition, Munich 2008 Wilderspin, Michael: Jurisdiction Issues: Brussels I Regulation Articles 6 (1), 23, 27 and 28 in Antitrust Litigation, in: Basedow, Jürgen/Francq, Stéphanie/Idot, Laurence (ed.), International Antitrust Litigation: Conflict of Laws and Coordination, Oxford and Portland 2011, page 41 – 59 Withers, Christopher: Jurisdiction and applicable law in antitrust tort claims, in: JBL 2002, page 250 – 271 Woods, Donncadh: Private Enforcement of Antitrust Rules – Modernization of the EU Rules and the Road Ahead, in: 16 Loy Consumer L Rev 2003 – 2004, page 431 – 461 Wurmnest, Wolfgang: Internationale Zuständigkeit und anwendbares Recht bei grenzüberschreitenden Kartelldelikten, in: EuZW 2012, page 933 – 939 Zagrosek, Roman: Kronzeugenregelungen im U.S.-amerikanischen, europäischen und deutschen Recht der Wettbewerbsbeschränkungen, Baden-Baden 2006

Subject Index access to evidence 46, 65, 67, 74 f., 77, 87, 166 actor sequitur forum rei 98 f., 101, 103, 124, 133, 139 anchordefendant 126 anti-competitive agreements 18, 43, 63, 124, 136, 145, 148, 173 antitrust policy 20, 89 assignee 135 assignment model 58 f. Brussels I Regulation 25, 28, 40, 69 f., 73, 85 f., 90 f., 93 – 97, 102, 112 f., 115 f., 120, 122, 126, 128, 132 f., 137, 139, 152, 155, 158 – 160, 162, 166 burden of proof 22, 30 f., 37 f., 58, 62 f., 67, 158, 166 cartel 17 – 19, 21 f., 24, 29 f., 33 f., 36, 42 – 45, 52, 54, 56 – 58, 63, 65, 70, 76, 86, 96, 100, 116, 124 f., 127 f., 138, 141, 145 – 147, 149, 151, 157, 171 – 176 cause of action 29, 38, 152, 154, 156, 161 CDC 57 – 59 choice-of-law 29, 39, 41, 45, 68, 85, 89 f., 109, 133, 150 choiceofcourt clauses 139 f. claimant’s venue 102 f., 131, 150, 167 class actions 51 – 55, 59, 74, 78 – 80, 82 – 84, 92, 134, 137 collective redress mechanisms 46, 48 f., 58 f., 62, 80 f., 92, 103, 137, 166, 169, 174 compensation 21 – 23, 26, 29, 33 f., 36 – 38, 43 f., 48 f., 51, 54, 56, 59, 61, 67, 74 – 77, 81, 83, 86, 88, 92, 95, 101, 103, 120, 127, 129, 135 – 137, 143, 149, 151, 165 f., 168, 170, 173, 175 Competition Appeal Tribunal 22, 34, 38 competitor 19, 151, 170 compliance 22, 30 concurrent proceedings 91, 154

conflict rules 39 consumer welfare 17, 47 consumers 17, 22 f., 47 – 49, 52, 55 f., 59, 69 f., 80 f., 92, 102, 114, 130 – 132, 134 – 137, 139, 157, 167, 169 contingency fees 61 f., 83 contractual damages claims 45, 96, 122, 127, 138 – 140, 152, 168 f. contractual obligations 26, 39 f., 110 contractual relationship 51, 95, 111 f., 116 f., 120 f., 127, 136, 138, 167 contribution 22, 112, 165, 174, 176 costs 43, 46 – 48, 52 f., 55 – 62, 67, 69, 77 – 79, 82, 84 f., 90, 92, 100, 103, 125, 129, 131 f., 135, 137, 155, 157, 165 f., 168 counter-claim 119, 162 Courage v Crehan 20 court first seised 120, 154 f., 163, 171 declaratory judgment 41, 89, 117, 122, 161 defendant’s domicile 44, 91, 95, 101 – 103, 105, 111, 120, 150 f., 170 deterrence 26, 48, 51, 53 f., 56, 75, 92 disclosure 38, 46, 60, 66 f., 77, 79 f., 82, 84, 87, 103, 117, 125, 174, 177 distribution contracts 109, 114 f. distributor 43, 106, 119 – 121, 125, 149 doctrine of forum non conveniens 158 – 160 dominant position 17, 19, 22, 30 f., 34, 65, 113, 124, 147, 149, 152 effects doctrine 42 empirical research 79, 92, 103 English High Court 34, 64, 138 EU legislator 83, 101, 153 factual connection 119, 121 f. familiarity with the court system 70, 100 Federal Court of Justice 37, 57, 64, 86, 100, 104, 119, 128 f., 131, 141, 168 fines 23, 35, 53, 171 – 173, 176 f.

186

Subject Index

follow-on 22, 30, 35, 56, 65, 74, 172 – 174, 177 forum contractus 95, 105, 110, 112, 114, 118, 121 f. forum delicti commissi 120, 144, 149, 170 Forum Shopping 28, 36, 39 f., 43 – 45, 49, 61 f., 67 – 69, 85 – 94, 103, 106 f., 123, 125 f., 129, 136, 143, 147, 149, 151, 153 – 155, 157 f., 160 f., 163, 166 f., 169 – 171 fragmentation of jurisdiction 111 f., 119 f. franchise contracts 31, 41, 114 funding 63, 74 German Federal Cartel Office 176 harmonisation 39, 80 – 82, 84 f., 92 f., 137, 163, 166, 169 Home State 61, 71, 92, 94, 100, 103, 134, 136, 167 horizontal agreements 18 immunity 171 – 173, 175 f. inconsistent decisions 90, 155 f. indirect purchasers 36 – 38, 42, 76, 141, 157 international jurisdiction 25, 69 f., 86, 93, 96 – 98, 101, 104, 111, 149, 159 f. irreconcilable judgments 91, 121, 125 – 128, 154, 157, 170 joint and several liability 173 language 20, 55, 70 f., 87, 100, 103, 131 f. legal fees 83 leniency 31, 65, 171 – 177 lex causae 107, 120 lex fori 39 – 41, 43 – 45, 69, 86, 89 f., 107, 120, 126, 129, 141, 166, 168 licensing agreements 115 – 117, 123, 168 Manfredi 21, 49, 64, 86 market 17 – 19, 24, 29 – 31, 37, 39, 42 – 44, 47, 58, 65, 72, 90 f., 96, 101, 116, 138, 143 f., 146 – 152, 167, 170 f., 173 matters relating to tort 107, 121, 141, 150 minimum tariffs 61 monopolist 19, 33 opt-in 51, 53, 55, 59, 81, 83 f., 137 opt-out 51, 53 – 55, 78 – 80, 82 – 84, 93, 137

parallel proceedings 90 f., 132, 151, 155 – 157, 159, 170 passing-on defence 36 – 38, 75 f., 79, 83, 166 place of acting 142, 144 – 147, 150 – 152, 170 place of damages 142, 144 – 146, 149 f., 152 place of implementation 145 f. place of operation 146 place of performance 95, 104 – 106, 110 – 114, 116 – 118, 120, 123, 152, 167 f. place of the harmful event 106, 143 pre-emptive action 89 price-fixing 45, 56, 96, 131, 136 private enforcement 20, 22 f., 46, 66, 71, 73 f., 77, 80, 84, 87, 96, 110, 112, 117, 139, 143, 151, 155, 165, 174, 176 private international law 27, 88 provision of services 105, 112 – 116 public enforcement 20, 53, 74, 93, 174 punitive damages 34 f., 38, 68, 74, 82, 84, 166, 174 representative actions 55, 59, 81, 83, 137, 169 requirement of fault 32 f., 38, 125, 166 Reverse Forum Shopping 91, 94, 155, 157, 160 f. right to a court hearing 54 Rome I Regulation 40 f., 115, 133 Rome II Regulation 30, 42, 44, 68, 122, 133 settlements 50, 54, 61 Sherman Act 75 Shevill-ruling 144 standard of proof 24, 46, 63 f. statutes of limitation 38, 46 subsidiary 113, 127 supply chain 36, 48, 136 tortious damages claims 124, 138, 152, 169 trebling of damages 75, 83 unjust enrichment 43, 136 US Supreme Court 75 vertical agreements 18, 43, 149 White Paper on Damages actions 21, 26, 47 f., 73, 81, 87, 100, 136, 165, 169, 175 wholesale traders 55, 58, 96, 114, 131, 140