Comparative study on class actions in competition Law infringements

Author:Laura Lazar
Pages:164-178
SUMMARY

Effective enforcement of competition law provisions represents a guarantee of well functioning markets. In order to achieve this, Europe used the US model and put a greater emphasis on what we name the private enforcement of competition law. Nowadays many of the EU Member States offers legal mechanisms to individuals that can claim damages for losses suffered as an effect of anticompetitive behaviours. General collective redress mechanisms (for all kind of damages suffered by consumers) are available in 16 EU Member States, while specialised collective redress mechanisms in competition matter are in force in 11 of the EU Member States. Taking into consideration this reality EU officials had a constant concern in recent years for developing uniform standards for this area at the level of the Union. The paper at hand presents the general characteristics, advantages and disadvantages of class actions in general and in competition matter, in special, followed by a short presentation of the collective redress mechanisms available in competition matter in three of the EU Member States: UK (England and Wales), Italy and Spain. Finally, the paper presents some of the major efforts made by the European legislator in the last years, in order to ensure uniformity between national legislations in what regards collective redress mechanisms in the benefit of European consumers.

 
CONTENT
164 LAURA LAZĂR
COMPARATIVE STUDY ON CLASS ACTIONS
IN COMPETITION LAW INFRINGEMENTS
Laura LAZR1
ABSTRACT
Effective enforcement of competition law provisions represents a guarantee of well functioning
markets. In order to achieve this, Europe used the US model and put a greater emphasis on what we
name the private enforcement of competition law. Nowadays many of the EU Member States offers
legal mechanisms to individuals that can claim damages for losses suffered as an effect of
anticompetitive behaviours. General collective redress mechanisms (for all kind of damages suffered
by consumers) are available in 16 EU Member States, while specialised collective redress
mechanisms in competition matter are in force in 11 of the EU Member States. Taking into
consideration this reality EU officials had a constant concern in recent years for developing uniform
standards for this area at the level of the Union.
The paper at hand presents the general characteristics, advantages and disadvantages of class
actions in general and in competition matter, in special, followed by a short presentation of the
collective redress mechanisms available in competition matter in three of the EU Member States: UK
(England and Wales), Italy and Spain. Finally, the paper presents some of the major efforts made by
the European legislator in the last years, in order to ensure uniformity between national legislations
in what regards collective redress mechanisms in the benefit of European consumers.
Key-words: class action (collective redress), damages action, competition law, EU law,
national legislation;
JEL Codes: L4, K21, K13, K33, K41
1. Introductory Concepts
In legal doctrine we cannot find a universally accepted definition of the
collective redress (or class action) concept. According to one of the definitions that
we can find in legal writings "collective redress is any mechanism that may accomplish
the termination or prevention of unlawful business practices which affect a multitude of
claimants (consumers and/or small and medium enterprises) or the compensation for the
1 ”Babeș-Bolyai” University from Cluj-Napoca, Faculty of Law, Department of Public
Law/ROMANIA, E-mail: laura.lazar@ubbcluj.ro
Law Review vol. VI, issue 2, July-December 2016, p. 164-178
Comparative study on class actions in competition law infringements 165
harm caused by such illegal practices"2. In a similar opinion, embraced by the
European Commission collective redress is defined ”as a mechanism that may
accomplish the cessation or prevention of unlawful business practices which affect a
multitude of claimants or the compensation for harm caused by such parties”3.The
definition was seen in legal doctrine as an umbrella definition, which includes
group litigation, model case-litigation, actions brought by ombudsmen or
consumer organizations, collective settlements based on opt-out mechanisms4,
skimming-off actions and injunctions against unlawful practices5.
Collective redress mechanisms have its origin in the England of the 17th
century, where group litigation was used to solve damages action initiated for
damages resulted from action which affected more individuals simultaneously
where it was difficult to handle individual cases. Group litigation in England was
based on the practice of the English courts called "bills of peace", which enabled
multiple plaintiffs or defendants to resolve common problems by a single legal
action brought before the Courts of Chancery6. In order to initiate group litigation
three conditions needed to be met: the existence of many persons interested to
initiate a given claim; the presence of the material interest of every single
individual in initiating the claim; the existence of a group representative who
could properly represent and protect the interests of all of the members of the
group7. The institution of group litigation survived in England until the 18th
century (more exactly until 1850) when it was replaced by individual litigation.
Even class actions died for a while in England it became very popular in the
United States after 1850, especially for defending property and civil rights,
consumer’s interest and the environment.
2 See for more details, P. Këllezi, B. Kilpatrick, P. Kobel, Antitrust for Small and Middle Size
Undertakings and Image Image Protection from Non-competitors, Springer Publishing House, Berlin, 2014,
p. 25.
3 Commission's Staff Working document. Public consultation: Towards a Coherent European
Approach to Collective Redress, 4 february 2011, SEC (2011) 173, p. 2.
4 A mechanism specific to multiparty actions, where the absent parties can benefit, or be bound
by the collective action even if they are absent from the proceedings, unless they take steps to
affirmatively exclude themselves, or opt-out of the lawsuit. This mechanism is opposite to the opt-in
mechanisms, also specific to multiparty actions, which require individual consent of the person in
order to be bound by the result of the collective action. See for more details P. G. Karlsgodt, World
Class Actions: A Guide to Group and Representative Actions around the Globe, Oxford University Press,
Oxford, 2012, p. xl.
5 See for more details, D. Fairgrieve, E. Lein, Extraterritoriality and Collective Redress, Oxford
University Press Publishing, Oxford, 2012, p. 108 and, also B. Hess, ”Collective Redress and the
Jurisdictional Model of the Brussels I Regulation”, p. 59 in A. Nuyts, N. E. Hatzimihail (coord.), Cross-
Border Class Actions. The European Way, Sellier European Law Publishers, Munich, 2014.
6 D. R. Hensler et al., Class Action Dilemmas: Pursuing Public Goals for Private Gains, RAND
Publishing, Santa Monica, 2000, p. 10.
7 See also S. Wrbka, St. Van Uytsel, M. Siems, Collective Actions, Cambridge University Press,
Cambridge, 2012, p. 127.
166 LAURA LAZĂR
The reasons which recommend class actions as an effective modality of
litigation are numerous and were mentioned in legal doctrine as being at least the
following: implying individuals who lack the resources, knowledge or experience
to sue individually, minimizing unnecessary litigation, efficiency savings, celerity,
cost savings etc8.
Although, class actions have numerous advantages, this modality of litigation
can also have several disadvantages. One of these disadvantages could be the
limited ability of the represented persons to control the ongoing procedures and
the possible conflict of interests which can arise between the agent and the
represented persons (also called by some authors passive group members9), due to
the lack of the personal presence of the latter in the proceedings. In most cases, the
quality of agent in class actions is detained by law firms, acting as an entrepreneur
who makes an investment when bringing the action to the court hoping to obtain a
generous fee in the event a judgment is rendered or the case is settled in favor of
the represented group10. In this context, we should mention the fact that
disproportional merits of lawyers compared to that of the represented plaintiffs
was also mentioned as being a disadvantage of group litigation11.
Problems related to proper representation could be directly proportional to the
number of represented persons and could be related to the type/regime of the
class action analyzed (opt-in or opt-out type). In an opt-in type regime class
litigation, every represented plaintiff needs to manifest its agreement for being a
represented party in proceedings. Instead, in opt-out regimes, all the injured
persons are considered as being a party to the proceedings unless they expressly
manifest their disagreement in this respect. So, the problem of misrepresentation
could arise more frequently in this latter type of class actions, taking into
consideration the fact that the group of represented plaintiffs is large and more
heterogeneous and many victims may not even be aware of the proceedings12.
Frivolous claims have represented another problem related to class actions,
some of the authors13 having the opinion that this kind of litigation can conduct
often to a baseless lawsuit.
Another aspect, often mentioned as a disadvantage of the class action type
litigation (especially of the opt-out regimes) was mentioned the free-rider problem.
Some of the authors from legal doctrine have the opinion that class actions could
8 See also J. Zekoll, M. Bälz, I. Amelung, Formalisation and Flexibilisation in Dispute Resolution, Brill
Nijhoff Publishing, Leiden, 2014, p. 396 și urm.
9 See in this sense, M. Tuil, L. Visscher, New Trends in Financing Civil Litigation in Europe, Edward
Elgar Publishin, Celtenham, 2010, p. 64.
10 Ibidem.
11 Ibidem.
12 Idem, op.cit., p. 65-66.
13 See for example, F. Weber, The Law and Economics of enforcing European Consumer Law,
Routledge Publishing, Londra, 2014, p. 77; G. Howells et al., Handbook of Research on International
Consumer Law, Edward Elgar Publishing, Cheltenham, 2010, p. 534.
Comparative study on class actions in competition law infringements 167
enhance excessive litigation due to the facilities offered to represented parties. The
problem of unmeritorious claimants was also treated, because class action “enables
parties who would otherwise not bring an action to have a piece of the legal pie when a
judgment of award is handed down”14.
Despite drawbacks shown before, many EU Member States had regulated (e.g.
Austria, Bulgaria, Denmark, Finland, France, Germany, Greece, Hungary, Italy,
Lithuania, the Netherlands, Poland, Portugal, Spain, Sweden and UK – England
and Wales) or are considering regulating group litigation mechanisms15.
Nevertheless, special collective redress mechanism in competition cases was made
available in many of the above mentioned EU States. In this context, in the recent
years the European Commission has been in favor of group litigation in
competition cases, its efforts to realize uniform standards in this matter between
EU Member States being part of the reform process regarding the decentralization
and strengthening the private enforcement of EU Competition Law.
2. Collective Redress Mechanisms in Competition Matters in some EU
Member States
As we have mentioned above, collective redress mechanisms are available in
the majority of the EU Member States, but not in all of the mentioned countries had
been regulated special mechanisms for group litigation in competition matter16.
According to the dates published by the British Institute of International and
Comparative Law17 at this moment, 11 from the 28 Member States of the European
Union has developed special legislation for group litigation in competition matters.
In the following we will briefly analyze the legal regime of group litigation in
competition cases in some of the EU countries detaining special legislation in the
domain.
2.1. UK (England and Wales)
UK is among countries with tradition in multi-party litigation, collective
actions being used in claims involving product liability, environment protection,
pensions, financial services and breaches of competition law18.
14 M. Dimsey, The resolution of international investment disputes, vol. I, Eleven International
Publishing, 2008, p. 213.
15 J. Keyte, ”Collective Redress: Perspectives from the US Experience” in Ph. Lowe, M. Marquis
(coord.), European Competition Law Annual, Hart Publishing, Oxford, 2014, p. 195.
16 M. Danov, F. Becker, P. Beaumont, EU Competition Law Actions, Hart Publishing, Oxford, 2013,
p. 37.
17 For more details regarding the situation in countries which have special legislation regarding
group litigation in competition law cases see the official website of the British Institute of International
Law and Comparative Law: http://www.collectiveredress.org/collective-redress/competition-law.
18 R. Mulheron, The Class Action in Common Law Legal Systems: A Comparative Perspective, Hart
Publishing, Oxford, 2004, p. 67.
168 LAURA LAZĂR
Collective actions in England and Wales in competition matter are regulated
by: Civil Procedure Rules19, Competition Appeal Tribunal Rules20, Competition
Act from 199821, and the recently adopted Consumer Rights Act from 201522.
According to the regulations in force, in the UK, collective claims may be
brought by multiple claimants or representative bodies (not only consumer’s
organizations23) for losses or damages which have resulted from breaches of the
UK or EU Competition rules, namely for anticompetitive behaviors which prevent,
restrict or distort competition within the UK or EU24.
It is worth to mention, that any number of claimants or defendants can be
joined as parties to a single claim, if the claimants has the same interest in all of the
stages of the proceedings. The major condition for a collective claim is the
requirement that the claim can conveniently be disposed of in the same
proceedings (i.e. in a single damages action), for the reason that rises the same,
similar or related issues of law and as such, is suitable to be brought in collective
proceedings25. Another condition is related to the agent, or representative who
formulates the collective claim, who needs to be a person who will fairly and
adequately act in the interests of class members26.
The collective party, represented by the above mentioned agent, comprises
only persons who have actually suffered a loss from the same anticompetitive
practice27. In this context, we need to mention the fact that rule 19.2 of the Civil
Procedure Rules permits to add to the proceedings, with the court permission, the
persons who have suffered a loss from the investigated anticompetitive behavior if
they are discovered at a later stage of the proceedings.
As we have said before, actual claims can be brought by any person who has
suffered loss or damage and can be “stand-alone” or “follow-on” cases. Stand alone
type cases arise when collective action of damages is brought for alleged
infringement of competition law, uninvestigated up to the date when the damages
action is brought before the court. Unlike that, follow-on type damages actions are
based on a competition law infringement decision of the Competition Commission
19 Available on: https://www.justice.gov.uk/courts/procedure-rules/civil/stat_instr.
20 Please see: http://www.catribunal.org.uk/240/Rules-and-Guidance.html.
21 http://www.legislation.gov.uk/ukpga/1998/41/contents.
22 http://www.legislation.gov.uk/ukpga/2015/15/contents/enacted.
23 The actual objective of the recent legislative modification made by Consumer Rights Act 2015
was to ease privation actions for breach of competition law, in particular for small and medium
enterprises and for consumers. Previous legislation gave the right to formulate collective actions only
for consumer organizations.
24 J. Blennerhassett, A Comparative Examination of Multi-Party Actions, Hart Publishing, Oxford,
2016, p. 45.
25 Competition Appeal Tribunal Rules, Rule 79 (1).
26 See for more details on this topic information available at: http://uk.practicallaw.com/6-618-
0351.
27 It is worth to mention, that according to the provisions of Competition Appeal Tribunal Rules
(rule 78(1) (a), there is no minimum number of claimants fixed in class actions.
Comparative study on class actions in competition law infringements 169
or Markets Authority, that of the Competition Appeal Tribunal or the European
Commission, after the case. In the latter situation, the mentioned decisions give rise
to reputable presumption of the existence of a competitive harm28.
In what regards the type of class actions (opt-in or opt-out) regulated in the
UK since the 1st of October 201529 both types of class actions are possible. So,
collectivities of individuals or businesses who have suffered losses from breaches
of competition law can bring an action on behalf of named consumers who have
taken the necessary steps in order to prove their interest in being part in the
proceeding, by notifying the class representative that their claim should be
included in the proceedings too (opt in basis class action)30. As well, after the recent
reform of the collective action process, actions can be brought also on behalf of a
defined class of consumers or on behalf of consumers in general, where members
of the class are included automatically31 to be parties in the proceedings, unless
they actively choose to “opt out” of the action, by notifying the class representative
that they have no interest in being party to the proceedings. More, pursuant to
provisions in force, it is possible to bring a claim on the basis of an estimation of
the total number of potential claimants, with individual claimants only needing to
come forward after the quantification of damages stage, in order to collect their
share of the total amount of damages awarded.
Before recent legislative modifications, only opt-in type procedures could be
brought before the courts. This type of proceedings represents a major difficulty
because all of the affected persons need to “opt-in” separately into the proceedings.
Opt-out type collective procedures give more power to consumers against
businesses who have engaged themselves in anticompetitive practices, because of
the cost savings and reduced procedural formalities for the individual claimants32.
The judgment given in both type of collective claim will be binding on all
parties represented. Reformed legislation also allows collective settlements to be
made by the competent court, in order to favor quick and easy settlement of the
cases. More, guilty companies can opt for voluntary redress schemes by paying
voluntary to the persons who have suffered damages as effect of their
anticompetitive practices.
28 See also A. E. Bass, K. A. Henderson, UK: A New Down for Antitrust Class Actions, Journal of
European Competition Law & Practice, September 2015, p. 3, available Online at:
https://www.cov.com/-/media/files/corporate/publications/2015/09/journal_of_european_
competition_law_practice_uk_a_new_dawn_for_antitrust_class_actions.pdf.
29 The date of entry in force of the Consumer Rights Act 2015 (Part.3, Chapter 2 on Competition).
30 For more details on the characteristics of opt-in or opt-out type class actions please see: S.
Dodson, An Opt-In Option for Class Actions, Michigan Law Review, vol. 115, Issue 2/2016, p. 175.
31 We have to mention that only UK domiciled persons are included automatically in the class,
those who are not UK domiciled needs to opt-in in the proceedings.
32 N. Heaton, The Introduction of Class Actions for Competition Claims in the UK, The Antitrust
source, February 2016, p. 1, available Online at: http://www.americanbar.org/content/dam/aba/
publishing/antitrust_source/ feb16_heaton_2_12f.authcheckdam.pdf.
170 LAURA LAZĂR
The actual amount of losses incurred by class members does not needs to be
known by the court in order to admit damages actions, competent courts having
the power to estimate loss where it is very difficult to prove the exact amount.
The competent court in first instance for judging collective claims in the UK is
the Competition Appeal Tribunal, constituted by the provisions of Enterprise Act
2002. This special tribunal has extensive competencies33 in determining if a given
case is suitable or not for class action type litigation, taking into consideration the
costs and benefits of collective proceedings, the size and nature of the class, the
suitability of case for aggregate award of damages, the availability of alternative
dispute resolution or any other means for resolving the dispute and other factor
which could be considered as being relevant by the court on a case by case basis. If
the court considers that the given case can be resolved adequately by class action, it
has large discretion in verifying if the representative of the class can be considered
as being a person “who will fairly and adequately act in the interest of the class
members”34.
If proceedings are based on a former decision of the national competition
authorities, or that of the European Commission finding the existence of an
anticompetitive behavior, the Competition Appeal Tribunal will be able to quantify
the exact amount of harm.
According to reformed class action legislation, the court can also apply fast
track proceedings35 for smaller claims, when litigation needs to be ended in
maximum 6 months from its commencement, in order to ensure a quicker, cheaper
and easier solution for cases which does not involve special problems. Another
important aspect refers to the possibility granted by Consumer Rights Act 2015 for
Competition Appeal Tribunal to make collective settlements if the case can be
solved without a trial in court.
Appeals to the decision of Competition Appeal Tribunal can be made on
points of law at the Court of Appeal in three weeks after the adoption of the
decision in first instance. The length of proceedings will depend on the volume of
evidence and the complexity of the issues involved.
In order to discourage frivolous or unmeritorious litigation, the losing party
will support the costs of proceedings also for the winner party (the loser pays
principle)36.
Damages actions via class action can be brought before the court in a
maximum term of 6 years after the date when the prejudice had been produced.
33 Ibidem, p. 6.
34 According to rule 78, par. 1 of the Competition Appeal Tribunal Rules of procedures provides
that this court may authorize a person to act as a class representative only where it considers that it is
“just and reasonable” to do so, the latter aspect depending on a multitude of factors, such as any
potential conflict of interest, the proposed representative’s ability to pay the defendant’s recoverable
costs if ordered to do so etc.
35 See also A. E. Bass, K. A. Henderson, loc.cit., p. 1.
36 N. Heaton, loc.cit., p. 7.
Comparative study on class actions in competition law infringements 171
2.2. Italy
In Italy, regulation on class actions was introduced only recently. First
provisions regarding the so called "collective actions" were introduced by Italian
Budget Law in 2007, who added article 140bis in the Italian Consumer Code37. The
objective of the newly introduced litigation type was to protect collective interests
by consumer association by offering the possibility to latter to initiate group
litigation for contractual or tort claims, or for damages resulted from unfair or
anticompetitive practices38.
The above mentioned provision was modified afterwards by art. 49 of Law no.
99/200939, which have modified the name of the litigation type introduced in 2007
into "class action" and the declared objective of the mentioned type of litigation. So,
article 140bis as it was modified by Law no. 99/2009, regulated class actions which
had the objective to protect the interests of each plaintiff, instead of the collective
interest declared by its former version.
Important novelty elements were introduced also in 2012, by Law no.
27/201240, which had widened the scope of rights which could be protected by
class actions. If the former version of article 140bis of Italian Consumer Code
declared that only consumers who have identical rights can bring a class action
into the court, the last version of the mentioned regulation permits to use class
action for the protection of homogeneous, but not absolute identical rights41.
In what regards the capacity to bring an action, Italian regulation in force
regarding class action accords this right only to consumers and users, defined in
Article 3 of the Italian Consumer Code as "individuals acting outside trade, business or
profession purposes". Accordingly, Italian legislation, unlike UK legislation, does not
permit to businesses to initiate class actions for the protection of their interests.
Also, damages resulted on the basis of an employment contract, are exempted
from the scope of class action regulation. Similarly to UK legislation, Italian class
action regulation does not require a minimal number of consumers, or after the
case, users, who need to bring the class action before court.
In Italy class action can be initiated only against "businesses, acting within the
scope of their businesses".
37 Legislative Decree no. 206 from 6th of September 2005 – Consumer Code, available Online in English
at: https://aiic.net/page/7469/italian-consumer-code/lang/32.
38 See also P. G. Karlsgodt, World Class Actions: A Guide to Groupe and Representative Actions around
the World, Oxford University Press, Oxford, 2012, p. 334; R. Nashit, “Italy's Class Action Experiment” in
Cornell International Law Journal vol. 43, p. 154.
39 Law no. 99 from the 23rd of July 2009, published in the Official Gazette no. 176 from the 31st of
July 2009, Ordinary Supplement no. 136.
40 Law no. 27/2012 from the 25th of March 2012, published in the Official Gazette no. 71 from 24th of
March 2012.
41 E. Falla, The Role of the Court in Collective Litigation: Comparative Report, Larcier Publishing,
Bruxelles, 2014, p. 143.
172 LAURA LAZĂR
In contrast to UK legislation, Italian regulations on class actions guarantees
only the possibility of formulating opt-in type class actions, where
consumers/users who have suffered damages as an effect of unfair or
anticompetitive commercial practices can make a written declaration regarding
accession (via certified mail, e-mail or fax to the class representative), without
needing the services of a lawyer42. Particulars who do not "opt-in" can initiate
individual proceedings for the protection of their interests. The term for opting-in
is maximum 120 days, until the first hearing in the case43.
Italy does not have special courts for solving class actions in competition
matter. So, civil court from the regional capital of the territory where the defendant
business has its registered offices will have the competence to judge the case.
Likewise UK in Italy the competent court also will verify the admissibility of
the case (in a procedure called, certification procedure). Class action will be
rejected in cases where is clearly unfounded, when a conflict of interests exists
between class members, or between them and class representative, where the
rights of plaintiffs forming the class are not homogenous, or when the class
representative is not an adequate one (i.e. does not have the necessary
administrative, or financial means to represent the plaintiffs). Orders of the court
on the admissibility of the case can be appealed before competent Court of Appeals
and subsequently, before the Italian Supreme Court of Cassation in 30 days44.
As in UK, also in Italy damages action can be brought only for actually
suffered prejudice. The final judgment of the court will order the granting of a
fixed amount of damages to the plaintiffs or, after the case, will mention the
criterion which needs to be taken into consideration by the guilty business in order
to establish the individual amount of damages owed to every plaintiff. Parties can
make a settlement regarding the payment of damages in 90 days after the
pronouncement of the decision. Decisions on damages are enforceable in 180 days
after publication45.
Like the UK, also Italy enforced the “looser pays principle”, according to
which the loosing party will be obliged to pay the procedural costs of the winner46.
2.3. Spain
Spanish legislation does not offer a separate regulation of class actions.
Instead, art. 11 of the Spanish Procedural Law47, which refers to the protection of
42 For more details see also M. Siragusa, “Options for Collective Redress in the EU” in Ph. Lowe, M.
Marquis (eds.) European Competition Law Annual 2011, Hart Publishing, Oxford, 2014, p. 242.
43 See information available at: http://uk.practicallaw.com/2-617-5865.
44 See also P. G. Karlsgodt, op.cit., p. 335.
45 See information available at: http://uk.practicallaw.com/2-617-5865.
46 G. Principe, Italian Class Actions. Un update – National Report, available on Stanford Law
School Online Platform at: http://globalclassactions.stanford.edu/sites/default/files/documents/
Italian%20Class%20Actions%20Principe.pdf.
47 Law no. 1/2000 from the 7th of January 2000 on Civil Procedure (Ley 1/2000 de 7 enero de
Enjuiciamento Civil), published in Official Gazette no. 7 from the 8th of January 2000.
Comparative study on class actions in competition law infringements 173
the interest of consumers, allows for a group of consumers or end-users whose
members are identified or easily identifiable, and/or consumer and user
associations and/or other legally constituted entities to bring claims for the
protection of the collective interest of the group before a court, and to claim
damages. Collective or class actions in Spain are used therefore for damages
actions in relation to product liability, unfair contractual terms, contractual
liability, abusive clauses in banking services, unfair competition and
anticompetitive business behavior48.
In Spain the capacity to sue via class action is attributed to: consumer and
users association; legally incorporated entities and to groups of affected
individuals. So, class action type damages actions cannot be brought before the
court by businesses. The only possibility of collective action for the latter is to
formulate individual actions, which can be joined by the court if case a connection
exists between the cases. Consumer and user associations in order to have the
capacity to sue in a class action type damages action needs to be: legally
constituted, officially registered and to have as objective the defense of consumer49
interests. Legally incorporated entities are considered associations who are not
consumer association, but their statutory purpose targets also the defense of
consumer rights. Groups of individuals can bring into the court class actions only if
the members of the group are determined, or can be easily determined and
represents the majority of the affected/prejudiced persons in a given case.
It is worth to mention that class actions can be brought also when the identity
of the affected consumers or users is not known (is undetermined), or it is difficult
to determine, when the action will protect the so called “diffuse interests”, but the
capacity to sue will be accorded only to consumer or users associations50.
Likewise UK and Italian legislation, Spanish provisions regarding class actions
does not determine a condition related to the minimum number of claimants in
class action cases.
The typology of class actions in Spain is atypical, being a mixture between opt-
in and opt-out type class actions. If the members of the class are identified or can
be easily identified the consumer association will announce the members about the
proceedings and consequently, member can opt into the proceedings51. Also the
48 See for more details P. A. Karlsgodt, op.cit., p. 597.
49 According to Spanish legislation (art. 3 of Royal Legislative Decree no. 1/2007 from the 16th of
November 2007 on Consumers and users – Real Decreto Legislativo 1/2007, de 16 de Noviembre, Ley
des Consumidores y Usuarios – published in Official Gazette no. 287 from the 30th of November 2007).
Consumers or end-users are “individuals acting for a purpose unrelated to heir commercial or business
activity, trade or profession”.
50 See also P. G. de Cabiedes Hidalgo, Group Litigation in Spain –National Report, available on
Stanford Law School Online Platform at: http://globalclassactions.stanford.edu/sites/default/files/
documents/spain_national_report.pdf.
51 So, the judgment will only affect the claimants involved in bringing proceedings. It will not
bind other parties that might also have suffered loss or damage as a result of the same infringement
but who did not participate in the action.
174 LAURA LAZĂR
competent court is obliged to announce the initiation of class action proceedings in
the media. After opting-in, consumers can opt-out from the proceedings, whenever
they want in the course of proceeding and before the adoption of the final
judgment. Instead, if members of the class are unidentified, or are difficult to
identify, the court will make a notification regarding the initiation of the
proceedings in the media and affected consumers or users can opt-in in a
maximum period of 2 months (period during which proceedings will be
suspended), the sanction being the impossibility to be part of the class and the
necessity to initiate an individual action in the court. Also in this case, consumers
can opt-out until the final judgment will be obtained52.
Class action type damages actions will be introduced a different court,
depending on the reason that gave rise to the damage. For damages resulted from
contracts and other than commercial private relations ordinary Civil Courts
(Juzgados de Primera Instancia) will have the competence. Instead, in damages cases
resulted from unfair commercial practices, commercial contracts or anticompetitive
business behavior, Mercantile Courts (Juzgados de lo Mercantil) will be competent.
The decisions of Civil Courts or Mercantile Courts can be appealed on points
of law before Courts of Appeal (Audencia Provincial) and subsequently, for
procedural reasons, before the Spanish Supreme Court (Tribunal Supremo) in 20
days53.
Class action type damages action can be successful if: a) there is an
act/omission which has effectively caused damages to consumers or end-users; b)
a causal relationship exists between the act/omission and the damages resulted
and c) the class of consumers is properly represented. According to article 1809 of
the Spanish Civil Code54 and article 19 of Law no. 19/2000 in cases when public
interest55 is not involved, parties have the possibility to sign a settlement56 in order
to finish the proceedings in an amicable way. It is worth to mention the fact that in
the quantification of damages resulted from anticompetitive behaviors national
competition authorities will collaborate with competent national courts, and the
non-binding opinion of the first related to the gravity and duration of the given
behavior will decisively influence the quantum of damages which will be
determined by the court57.
52 See for more details art. 11 of Law no. 1/2000.
53 See also M. H. Greer, A Practitioner's Guide to Class Actions, ABA Publishing, 2010, p. 674-675.
54 Royal Decree from the 24th of July 1889 (Real Decreto de 24 julio de 1889 de la edición del Código
Civil), published in Official Gazette from 25th of July 1889.
55 Public interest can be defined as the ensemble of the citizens' material and spiritual needs at a
given moment. See in this sense E.E. Ștefan, Manual de drept administrativ. Partea a II-a. Caiet de seminar,
2nd edition, Universul Juridic Publishing House, Bucharest, 2014, p. 18.
56 See also R. A. Rosen, Settlement Agreements in Commercial Disputes: Negotiating, Drafting &
Enforcement, vol. I, Wolters Kluwer Publishing, New York, 2017, p. 41.
57 L. A. Velascor et. al. (eds.), Private Enforcement of Competition Law, Lex Nova Publishing,
Valladolid, 2011, p. 206.
Comparative study on class actions in competition law infringements 175
In order to deter frivolous or unmeritorious actions Spanish legislation also
adopted the loser pays principle, mentioned above also in case of the UK and Italy.
The difference reported to the latter countries resides in the fact that in Spain, the
loser can be obliged to pay procedural costs of the winner only if it does not
exceeds 1/3 of the total amount of claim. We also have to mention the fact that
consumer or users association does not pay court fees, according to Spanish
legislation58.
Time-limits for bringing class action into the court are different than in UK, or
Italy. So, in competition or civil matters the limitation for bringing the action is one
year59 since the moment the wrongful act was known or should have known by the
claimant.
3. Class Actions in EU Competition Law
From the beginning of the 2000's, the reform process of EU Competition Law
initiated by the European Commission puts a great emphasis on the
decentralization and a better private enforcement of EU Competition Law. The
reform process had generated an open debate regarding effective collective redress
mechanisms, namely on their proper design, parameters and effectiveness, under
the conditions of significant differences existent between national legislations60. In
this context, the development of common principles at EU level for national
damages actions was a must have item for the well functioning of the reformed EU
Competition Law. In order to enhance damages action for consumers who have
suffered a reduced quantum of damages there was also need to establish a
common legal framework for collective redress mechanisms. In this sense, the EU
Commission had more legislative steps, such as the Commission Recommendation no.
2013/396/EU from the 11th of June 2013 on common principles for injunctive and
compensatory collective redress mechanisms in the Member States concerning violations of
rights granted under Union Law61. This legislative act formed the base for the
Communication from the Commission to the European Parliament, the Council, the
European Economic and Social Committee and the Committee of the Regions “Toward a
European Horizontal Framework for Collective Redress62. According to these non-
binding legislative acts, collective redress mechanism in EU Member States should
be based on common principles such as follows:
58 D. Campbell, Comparative Law Yearbook of International Business 2010, vol. 32/2010, Kluwer Law
International, Alphen aan den Rijn, 2010, p. 126-127.
59 A. Wiewiórowska-Domagalska, Consumer Sales Guarantees in the European Union, Sellier
European Law Publishers, Munich, 2013, p. 154.
60 D. Ashton, D. Henry, Competition Damages Actions in the EU: Law and Practices, Edward Elgar
Publishing, Cheltenham, 2013, p. 42.
61 Published in OJ L 201, 26.07.2013, p. 60-65.
62 COM/2013/0401 final*, available Online at: http://ec.europa.eu/justice/civil/files/com_
2013_401_en.pdf.
176 LAURA LAZĂR
- claimants should be able to seek court orders from national courts to cease
violations of the rights granted by EU Law and to claim damages for harm caused
by the mentioned violations via collective actions, when a large number of persons
are harmed by the same illegal practice;
- collective redress procedures in EU Member States for EU law
infringements should be fair, equitable, timely and not prohibitively expensive;
- collective redress mechanism should be based on an opt-in principle where
the affected persons should give their direct consent for being part in collective
proceedings;
- the establishment of ban on punitive damages, in order that collective
damages actions to have the objective to compensate only effective harm produced
because of EU law violations;
- the establishment of ban on contingency fees to lawyers, in order to prevent
profit making representation in collective actions;
- the application of the “looser pays principle” as a means to prevent
frivolous and unmeritorious damages actions.
The efforts of the EU legislator regarding the establishment of common
principles regarding damages actions in competition matters had culminated in the
adoption at 26th of November 2014 of the Directive no. 2014/104/EU63 of the European
Parliament and the Council on certain rules governing actions for damages under national
law for infringements of the competition law provisions of the Member States and the
European Union64. Although this directive does not refer to collective redress
mechanism it establishes important principles regarding damages action in the
EU65.
One of the most important common principles established by the above
mentioned directive refers to the right to full compensation66 of the harmed
persons, in order to ensure their replacement into the same position/in an
equivalent position to that had before the production of the prejudice.
Another important principle refer to the obligation of national competition
authorities to disclose evidence from competition files to national courts in order to
facilitate the process related to the quantification of damages resulted from
anticompetitive behavior67. It is worth to mention that the decision of national
competition authorities should have the role of prima facie evidence (relative
63 For more details regarding the application of directive's provisions on anticompetitive
agreements and abuse of dominance please see I. Lazr, Dreptul Uniunii Europene în domeniul
concurenţei, Universul Juridic Publishing, Bucharest, 2016, p. 232-235; 303-305.
64 Published in OJ L 349, 5.12.2014, p. 1-19.
65 See in this sense the point no. 13 from the preamble of the directive, according to which the
“directive should not require member states' to introduce collective redress mechanisms for the enforcement of
article 101 and 102 TFEU”.
66 Art. 1 of Directive no. 2014/104/EU.
67 Idem, art. 8-9.
Comparative study on class actions in competition law infringements 177
presumption) of competition infringement and competitive harm. According to the
EU legislator the time limit for damages action should be at minimum 5 year68.
The directive also establishes the principle of joint liability of the undertakings
who have engaged themselves in anticompetitive behavior69.
The mentioned efforts of the EU legislator has the objective to ensure common
standards at EU level regarding damages action and a consumer orientated and
efficient enforcement of EU law in general and the EU Competition Law, in special.
Also, well and uniformly regulated damages actions can deter competition law
violations in the EU and can prevent gains obtained via illegal competition
practices70.
4. Conclusions
Although origination from Europe (i.e. England) class actions has gain
popularity in US jurisdiction as a mean for the protection of collective interests of
consumers and inviduals in case of damages action. On the contrary, European
countries were more hesitant in using this type of litigation, which is why we assist
to a great diversity among Member States regarding the use o collective redress
mechanisms in general and in competition matters, in special.
The need for reform in EU Competition Law in what regards decentralisation
and a greater emhasis on private enforcement of competition law provisions has
brought to the fore the problem of the uniform regulation on collective damages
action, especially in competition law cases.
We have shown that class action type litigation has numerous advantages and
as well some disadvantages, but remain a proper mean for handling damages case
which involve a great number of affected consumers.
As we have seen, in European the majority of European countries class action
mechanisms in competition matters has are relatively new. We had observe
common as well distinct features. UK regulates a class action mechanism which is
closest as characteristics to the US class action system. So, we can find here opt-in,
as well opt-out type class actions, when Italy prefers opt-in type mechanisms.
Spain represents an atypical example in this sense, by using a mixture of the two
well knowned class action types. Except the UK, class actions in the analysed EU
countries can be brought before the court only by consumers or end-users or
specialized associations of the latter, without the businesses having this right. As
regarding the competence of the courts, UK has designated special courts for
resolving class actions in competition matters, while in Italy and Spain common
civil or commercial courts are entitled to solve the cases.
68 Idem, art. 10.
69 Idem, art. 11, par. 1.
70 See also M. Ioannidou, Consumer Involvement in Private EU Competition Law Enforcement, Oxford
University Press, Oxford, 2015, p. 5.
178 LAURA LAZĂR
All of the analysed EU countries are permitting damages class actions in order
to cover the actually suffered prejudice, permits settlement in this type of
proceedings and are applying the loser pays principle in order to deter frivolous or
unmeritorious claims.
The EU efforts regarding the ensurance of a uniform regulation of damages
actions in competition matters has the objective to realize a greater harmony
between the member states legislation in the matter and to ensure a greater
protection for the European consumers.