Lotta Pohjanpalo provides an insight into the current legal framework governing competition damages actions in Finland, and foresees a more claimant-friendly environment in light of forthcoming legislative changes
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?
In Finland, competition damages actions have mainly been brought as follow-on actions based on the finding of an infringement by a competent court. Accordingly, the sectors where competition damages actions are brought tend to be the same as the sectors where cartels have been unveiled and sanctioned by the courts. Such sectors would typically include, e.g., the forest and paper industry, where products are homogeneous and undertakings are competing mainly on price.
The most significant competition damages case to date has been the actions brought by 40 Finnish municipalities and the Finnish state in the so-called asphalt cartel case, where significant damages were awarded to the municipalities.
We have also seen follow-on damages actions based on, e.g., the raw wood cartel, the car spare parts cartel and in the chemical industry.
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?
Damages claims have been brought mainly by direct purchasers who have paid an overcharge or by undertakings who have lost business as a result of a cartel, e.g. due to a collective boycott. Under the current Competition Act, anyone who suffers damage as a result of a competition infringement has a right to damages. The previous Act on Competition Restrictions, which was repealed in 2011, only granted such right to undertakings. Private end consumers could at least in theory have brought damages actions based on the general Damages Act, but this has for various reasons not been a genuinely relevant option.
The specific right to damages under the Competition Act is not linked to the existence of any contractual relationship between the cartel victim and the cartelist and, consequently, indirect purchasers may also claim damages based on the Competition Act (in addition to the general Damages Act). Indirect purchasers, however, face even more complex procedural and evidentiary hurdles than direct purchasers. In the follow-on damages actions brought in the general courts so far, there have been no indirect purchasers or, e.g., in the asphalt cartel, the indirect purchasers would have been the Finnish tax payers.
3 What approach are the courts taking to claims that originate from investigations or infringements arising out of the jurisdiction?
This remains to be seen. So far, the Finnish courts have mainly dealt with claims originating from investigations and infringements within the Finnish market. One follow-on action, which was based on the decision by the European Commission in the Sodium Chlorate cartel case, was eventually settled. Claims based on contractual relationships may naturally also be brought and dealt with in arbitration proceedings.
4 Do claimants favour your jurisdiction when they have a choice as to where to lodge a claim? Why?
Finland is probably not the most favoured jurisdiction as regards forum shopping due to the nature of its national procedural rules (e.g. the absence of disclosure) and the traditionally rather restrictive approach to awarding significant damages. Although full compensation is the point of departure, the courts rely heavily on the principle of non-enrichment, i.e. the amount of the compensation should correspond to the actual loss suffered. There is no punitive element to damages under Finnish law. The burden of proof as to demonstration of both the damage and the quantity of the damage lies with the claimant. This will, however, change as a result of the implementation of the EU Directive on Antitrust Damages (the “EU Damages Directive”), which will bring about a rebuttable presumption of damage caused by cartels.
Having said that, it must be noted that the decisions of the Helsinki district court in the asphalt cartel damages case (which have been appealed) are encouraging for claimants. Many procedural rules and other controversial legal issues were interpreted in favour of the claimants. The court also applied the doctrine of economic succession on civil law liability directly based on EU law principles without any specific basis for such application under national law. This is a clear manifestation of the principle of effective private enforcement of competition law as set out in the EU Damages Directive. In that sense, Finland has been a forerunner in embracing the spirit of the Directive, which is yet to be implemented in national law.
5 In practice, are the courts generous to claimants when awarding disclosure, including pre-action disclosure?
Finnish courts do not recognise disclosure as such.
A Finnish court may order another party to produce a specific piece of evidence, which must be sufficiently specified, if such piece of evidence may be relevant in pending proceedings. A Finnish court would, however, not award general disclosure of unspecified documents and would not order a piece of evidence to be produced prior to the relevant proceedings having been initiated.
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?
A Finnish court may confirm a settlement between the parties to a pending matter. A confirmed settlement is enforceable similarly to a judgment. Such confirmed settlement does, however, bind only the parties to the settlement.
The same applies in the event that the relevant case would be a class action brought by the Consumer Ombudsman under the Act on Class Actions in a dispute between consumers and an undertaking. A confirmed settlement entered into by the Consumer Ombudsman as representative of the class is binding only on the class members, i.e. those who have opted in and become parties to the class action. Finland does not recognise opt-out class actions. So far, no class actions have been brought in Finland, and class actions are only possible in matters which range within the competence of the Consumer Ombudsman.
7 How long do damages actions take? What is the likely range of costs required to defend a claim?
Claimants should be prepared for lengthy court proceedings and considerable legal costs. In the damages actions based on the asphalt cartel, the matter was resolved in the first instance some five years after the first actions were initiated and some ten years after the Competition and Consumer Authority submitted its proposal to the Market Court on competition infringement fines for the cartel. This is obviously a very long time and the matter is still pending on appeal. This also means that, in practice, a considerable part of any damages awarded will consist of penal and return interest.
There is no typical range or upper limit on costs but clearly, the legal and party costs for defending a claim will be considerable.
8 What funding options are available for (i) claimants and, (ii) defendants, in your jurisdiction?
Third party funding is to a large extent unregulated in Finland and is generally allowed. Usually, cases of third party funding do, however, not become public, with the exception of situations where an insurance company funds proceedings on the basis of an insurance taken out by the party to the proceedings. The only specific limitation on third party funding is that the lawyer acting as counsel in the case may not be the funder of the proceedings where he acts as counsel.
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?
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?
There is still no established decisional practice or foreseeability regarding damages actions. A number of significant decisions have been appealed and, accordingly, many legal issues are yet to be resolved by the appellate courts and possibly also by the Supreme Court. Further, stand-alone actions are still largely untested in Finland. The development of the law in this area is important for improving the effectiveness of private enforcement of competition law.
Moreover, the development of a proper class action system for antitrust damages would likely improve effectiveness significantly. For example, as a result of the raw wood procurement cartel, some 1,700 private forest owners have brought individual damages claims against a number of forest industry companies. Although the court is processing these actions jointly, considerable procedural and cost benefits would likely ensue from collective redress.