Olaf Koktvedgaard and Søren Zinck discuss the advantages of lodging a claim in Denmark and predict a potential increase in the number of damages actions following the forthcoming implementation of The Damages Directive
1 Are there any particular sectors in your jurisdiction which tend to be a focus for competition damages actions? Why do you think this is the case?
There are no particular sectors in Denmark which tend to be a focus for competition damage actions as such.
However, we have seen major damage claim cases in several sectors, e.g. energy, mail, chemicals, media, audiovisual and compressors.
2 Who do damages claims tend to be brought by in your jurisdiction? (e.g. direct purchasers, indirect purchasers, end consumers?) If claims are not currently being brought by indirect purchasers and/or end consumers, why do you think this is?
As a general rule, damage claims in Denmark tend to be brought by direct purchasers or competitors.
However, the passing on defence is acknowledged by the Danish courts in competition cases, and we have seen at least one case in which claims have been brought by indirect purchasers. Thus, in a major follow-on damage claim case related to alleged excessive pricing exercised by the nationwide energy company DONG, a large number of indirect customers have claimed for damages.
To our knowledge, there are no cases in which claims related to competition law violations have been brought by end consumers.
3 What approach are the courts taking to claims that originate from investigations or infringements arising out of the jurisdiction?
The Danish courts generally take a pragmatic approach to damage claims and show a willingness to try the case as well as to award damages on a discretionary basis.
As a main rule, damage claims will not be brought before the courts until the administrative case serving as the legal basis for the damage claim has been closed.
In order for a claimant to be awarded damages, the claimant must prove the existence of a legal basis for liability, the existence and size of a loss, causation between the legal basis for liability and the loss, and foreseeability/adequacy of damages.
In follow-on damage claim cases, it is generally assumed that the administrative decision constitutes a legal basis for liability. Accordingly, follow-on damage claim cases are usually focused on the issue of whether the remaining conditions for awarding damages have been fulfilled, see above.
Follow-on damage claim cases will often proceed simultaneously, although slightly delayed, with a court case concerning an appeal of the administrative decision made by the competition authorities. In regard to the latter, the courts are willing to conduct a thorough examination of the appropriateness of the legal test applied by the competition authorities and other purely legal questions, but will generally be more reserved when examining discretionary parts of the appealed decision.
4 Do claimants favour your jurisdiction when they have a choice as to where to lodge a claim? Why?
It is difficult to give a clear-cut answer to this question. However, there have been an increasing number of follow-on damage claim cases in Denmark over the past years, including cases with an international scope. Furthermore, in two recent cases, the defendant opted for a Danish venue and thus fired “Danish torpedoes” to ensure a Danish venue for the follow-on damage claim cases.
One advantage of bringing a follow-on damage claim case before the Danish courts is that the costs are rather low. Thus, court fees are maximised at approx. EUR 20,000, and attorney’s fees are generally lower than in many other jurisdictions. It is also worth noting: that the courts are generally willing to award damages on a discretionary basis if it can be substantiated that the claimant has suffered a loss; that the courts do their best to award damages corresponding to the loss suffered; and that, according to recent case law, interest may be awarded from the time where the competition law violation occurred.
On the other hand, it should also be noted that, in general, it is not possible to accelerate the proceedings (for instance, summary judgments are not available under Danish law). Quite a few procedural measures are available, making it possible for the defendant to prolong the process. Thus, the defendant may demand expert statements, move for an adjournment, request a referral to the ECJ, etc. However, the courts will only accept such measures to a certain extent and will intervene if the measures taken are not necessary given the facts and complexity of the case.
Furthermore, causality between the competition law infringement and the loss must be substantiated before the court will award damages.
5 In practice, are the courts generous to claimants when awarding disclosure, including pre-action disclosure?
The main rule under national Danish law is that, in relation to follow-on damage claims in competition law cases, third-party claimants will not be able to obtain access to the files of the Danish competition authorities concerning the infringements in question. Furthermore, such third-party claimants will not have access to any other kind of pre-trial discovery. However, the claimants cannot be faced with a total block on access to evidence in cartel cases, see the judgment of the European Court of Justice (ECJ) in case C-536/11, Donau Chemie.
Under the Danish Administration of Justice Act, the court may, on request by a party, order another party or a third person to disclose documents in his or her possession or custody which may be significant to the case. Further, the court may, ex officio, order a party to disclose documents if, but for such evidence, the facts of the case would remain uncertain. The latter possibility is, however, theoretical and very rarely used, as the Danish courts expect the parties to organise the procedure themselves. Thus, the courts will generally only issue procedural orders upon request.
Insofar as a court order for disclosure of information is requested, the court will exempt information which the party or third party would be exempted or excluded from providing when acting as a witness. As an example, a person is exempt from the duty to act as a witness if the testimony would harm the witness himself or his close relatives by giving rise to punishment, loss of welfare or other considerable harm. Considerable harm in a follow-on damage claim case could be the economic harm arising from the disclosure of business secrets.
The party submitting the request for disclosure must specify the facts that he wishes to prove with the requested documents. Further, the disputed facts must be of relevance to the case and there must be a probability that the requested document will provide the necessary information. The courts ultimately enjoy a wide discretion as to whether disclosure of documents should be granted.
It should be noted that failure by a party to adhere to an order of disclosure may be taken into account by the courts as evidence against him. However, the courts do not have further options to compel the requested party to comply with its order.
As regards third persons and the Danish competition authorities, the court may order them to deliver documents.
The court may also obtain evidence from foreign competition authorities. In this case, the court will, based on information provided by the party wishing to obtain the evidence in question, issue a letter of request to the relevant foreign authority. The court may require that the party requesting the taking of evidence provides security for the costs of obtaining evidence.
6 How do the dynamics of a settlement really work in your jurisdiction? Is there a mechanism by which a "global settlement" can be approved/enforced?
As a general rule, it is possible to enforce a settlement in Denmark, provided that it is expressly stated in the settlement agreement that the agreement may serve as a basis for execution.
However, a settlement between a claimant and a defendant in a follow-on damage claim in a competition law case is only binding between the parties and cannot be extended to include other defendants. Accordingly, in a case where several cartel participants are jointly and severally liable for the claimant’s loss, a settlement between the claimant and one of the cartel participants does, e.g., generally not preclude the other cartel participants from submitting recourse claims towards the settling defendant if they are sentenced to pay damages to the defendant.
7 How long do damages actions take? What is the likely range of costs required to defend a claim?
The clear main rule in Denmark is that any case may be tried in two instances. There is no definite time schedule in this regard. However, roughly estimated, a court case in the first instance takes between one and two years, while a court case going through two instances takes between two and three years. It is, however, not uncommon that court cases going through two instances last considerably longer.
As a starting point, the parties will, with the court’s intervention, determine a time schedule for the case in the early stages of the process, which if possible will include setting a specific date for the oral hearing and thus the end of the court proceedings. The time schedule will, to a large extent, depend on the parties, e.g. whether they demand expert statements, move for an adjournment, request a referral to the ECJ, etc. In general, it is not possible to accelerate proceedings (e.g. summary judgments are not available).
The courts generally decide which party shall bear the legal costs (including court fees), applying as a main rule the principle that the losing party shall bear the legal costs. Thus, the successful party can recover a certain portion of the legal expenses according to the court's decision. The courts have published non-binding guidelines for the recovery of costs. According to the guidelines, the court fees (up to approx. EUR 10,000 when submitting the claim and another EUR 10,000 prior to the oral hearing, summing up to a maximum of EUR 20,000 in court fees) and other necessary expenses will be compensated in full. However, fees to lawyers will only be compensated with “an appropriate amount”. In general, the successful party will not recover all of its costs as the guidelines published by the courts are based on lower legal fees than those charged in practice. Consequently, although the courts have responded to critique of low awards of costs, the difference between true legal costs and awarded costs can be significant.
8 What funding options are available for (i) claimants and, (ii) defendants, in your jurisdiction?
As regards both claimants and defendants, follow-on damage claim cases may be funded by legal expenses insurance, provided the conditions of insurance are fulfilled, which is generally most likely with regard to claimants.
Further, with regard to claimants, a follow-on damage claim may be funded by way of a class action, in which case the claimants can share the costs. Class actions are regulated by the rules of the Danish Administration of Justice Act, and, as a general rule, a class action is subject to the same procedure as other Danish court cases.
Additionally, in case several persons have raised claims for damages due to infringements of the Danish Competition Act or Article 101 or 102 TFEU, the Danish Competition Act provides for the possibility that the Consumer Ombudsman may be appointed as representative for the class for the purpose of recovering such damages under a class action.
It is also possible to accumulate several cases subject to certain conditions set out in the Administration of Justice Act.
Furthermore, under Danish law, it is possible for both claimants and defendants to obtain free legal aid subject to certain conditions set out in the Administration of Justice Act. However, the conditions will, as a general rule, not be fulfilled in follow-on damage claims for competition law infringements, and, moreover, the Department of Civil Affairs has declared that it will generally not grant free legal aid to small business owners in these type of cases.
9 Do you anticipate any significant increase in damages actions in your jurisdiction over the next year or two? If so, where and why do you anticipate these increases coming?
We anticipate an increase in damages actions in Denmark over the next year or two.
The Damages Directive (Directive 2014/104/EU) is expected to be implemented in 2016 (a draft bill for the implementation of the Directive was presented in the autumn of 2015 and subsequently withdrawn following a consultation; however, a new draft bill is expected to be introduced during 2016).
The implementation of the Directive will bring even more focus on the possibility to claim damages for competition law infringements and will probably also stimulate the claimants’ desire to claim damages. Moreover, it seems as if the trend towards a growing number of large damages actions which has emerged over the past few years has not peaked yet.
Furthermore, it should be noted that the fact that the Commission has issued a communication and a practical guide for quantifying harm in actions for damages based on breaches of Article 101 or 102 TFEU is expected to have a positive impact on the number of damages actions brought before the courts. Thus, it has previously been the general perception that there was substantial uncertainty as to how to quantify harm in damages actions.
10 In your opinion, what are the key changes (if any) required in your jurisdiction to improve the effectiveness of private enforcement of competition law?
The key change will be the implementation of the Damages Directive (Directive 2014/104/EU), cf. above. Thus, even though the material changes of the law which will follow from the implementation of the Damages Directive are rather limited, it is likely that the focus on the possibility to claim damages in itself will lead to more cases being brought forward, thereby improving the effectiveness of private enforcement.
The authors would like to thank associate partner Frederik André Bork for his contribution to this chapter. Frederik provides specialist advice on all aspects of EU and Danish competition law. Frederik’s experience includes several large, multi-jurisdictional follow-on damages cases, criminal cases, and some of the most well-known abuse cases in the EU.