Edouard Sarrazin and Marie Hindré discuss competition damages actions in France and examine the practicalities surrounding both class actions and individual claims, while shedding light on recent developments in pre-action disclosure
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?
Damages claims can be brought before French civil courts for any infringement of competition law provisions, regardless of the sector in which the alleged infringement was reported.
The claims are brought on the general provisions applicable to all actions for damages (under tort law), which require that the fault of the alleged infringer, the damage suffered and the causal link between the fault and the damage be demonstrated. (Article 1382 of the French Civil Code provides that "any act of a person, which causes damages to another, shall oblige the person by whose fault it occurred, to compensate it".)
For the time being, there have been relatively few cases of claimants bringing competition damages actions either directly (stand-alone) or after a competition authority's decision (follow-on) before the courts, which makes it difficult to determine whether some sectors tend to be a focus for such actions. Indeed, in the last two years, decisions have been issued in sectors as diverse as telecommunications, energy, distribution, the recycling and chemicals industries and online travel agencies.
However, it should be noted that in practice, in 2015, all competition damages claims were brought by professionals working in recently deregulated sectors (such as energy and telecommunications), where there are still relatively few players, or by major companies in other sectors such as programming or 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?
Claimants can theoretically be direct or indirect victims of the infringer, such as purchasers, consumers or competitors, on the basis of tort law.
Since the 2014 Consumer Affairs Act ("loi Hamon"), consumers are allowed to bring class actions against legal persons who have allegedly infringed competition law provisions, through 15 approved consumer protection associations (Consumer Affairs Act n° 2014-344 of 17 March 2014). Six class actions have been initiated to date, but this new mechanism is at this stage only used for consumer law infringement and no class actions have been launched for competition law infringement.
In practice, case law reveals that claims tend mainly to be brought by competitors or direct purchasers. Out of the nine decisions of competition damages issued by French civil and commercial courts in 2014 and 2015, four were initiated by competitors and five by direct purchasers.
To be more specific, claims tend to be brought by major companies. Indeed, the cost of launching proceedings in competition law is fairly high (for example, due to lawyers' fees and experts such as economists) and is often prohibitive for direct or indirect purchasers such as small and medium-sized enterprises (SMEs).
As for consumers, they tend either not to know about the anticompetitive infringements on which they could base their claim, or are discouraged by the difficulty of proving the infringement and the cost and length of the judicial procedure. There is therefore no case law where the claimant is a consumer. However, given the significant average length of proceedings, it is possible that some actions have recently been initiated by consumers and simply not yet made public.
The Consumer Affairs Act is also likely to change this trend and encourage consumers to initiate actions. Indeed, for the civil courts, the fault of the alleged infringer will be established in the case that it is recognised in a decision by a competition authority, provided the decision is no longer subject to appeal on this issue. This fault will be considered "irrefutably established" and the court will be bound by this, lowering the burden of proof for the consumer.
3 What approach are the courts taking to claims that originate from investigations or infringements arising out of the jurisdiction?
There are no specific limitations on the standing of non-national legal or natural persons in French law. To the best of our knowledge, the situation has never arisen in practice, so there have not yet been any decisions on the approach adopted by French courts regarding these claims.
Various situations could be imagined, though. For consumers wishing to initiate a follow-on class action based on a decision by a foreign competition authority or by the European Commission, it should be noted that the Consumer Affairs Act does not distinguish between decisions by the French Competition Authority (FCA), the European Commission or foreign competition authorities in terms of probative value. The Act even goes further than the EU Damages Directive on this point, the latter only stating that the decision can be considered prima facie evidence.
Foreign professional claimants, i.e. nationals or companies of another country, can also bring their claim before a French court. In order to do so, according to private international law provisions, they will have to demonstrate the link between their case and the French jurisdiction. Such link will always be established when the alleged infringer is a French company or the victim is French, even in cases involving foreign obligations. This link can also be assessed by the judge in concreto if, for instance, the alleged infringement took place in France.
4 Do claimants favour your jurisdiction when they have a choice as to where to lodge a claim? Why?
Claimants do not seem to favour the French courts when deciding where to lodge their claim.
This can be explained by several factors, including the poor culture of private enforcement in France, unlike in common law countries. French courts are rather reluctant to grant significant damages to victims of antitrust practices. The rule is the full and exact compensation of damages, and the prohibition of punitive damages or unjust enrichment.
It is therefore quite rare for the courts to award significant compensation to the claimants. Only one significant exception to this rule has recently been made, in a case involving SNCF, the French rail company, where the Paris Commercial Court awarded €7 million to a travel agency for the harm caused by an agreement between SNCF and Expedia (Paris Commercial Court, 26 April 2013, Switch / SNCF).
Furthermore, the absence of funding options and the length of the procedure, as developed in questions 7 and 8, tend to make it difficult for professional claimants in the form of SMEs, which are not eligible to bring class actions, to bring a claim on their own.
5 In practice, are the courts generous to claimants when awarding disclosure, including pre-action disclosure?
Unlike common law, French law does not provide general discovery or disclosure procedures.
Nevertheless, some tools exist. At the pre-trial stage, the victim can request that the judge protect or establish proof of specific facts when the resolution of the future claim depends on these facts (Article 145 of the Civil Procedure Code).
During the trial, the rule is that the claimant bears the burden of proof. However, the judge has broad powers to investigate the case: (s)he can order the disclosure of any type of document from the parties or third parties, or from public bodies, and can appoint experts, etc.
As regards elements contained in the files of the FCA for follow-on actions, article L.462-3 of the French Commercial Code (as modified by Act n° 2012-1270 of 20 November 2012) provides that they can be disclosed if necessary, with the exception of those obtained through leniency applications.
In practice, French courts have evolved on this issue through three major cases. In the Semavem / JVC case (19 January 2010, n°08-19.761), the Supreme Court stated that provided a party demonstrates that the disclosure of confidential elements gathered by the FCA during its investigations is necessary to the exercise of his/her rights, the judge may order the Authority to disclose these documents. In the Ma liste de courses / Highco case (20 November 2013, n°12-05.813), the Paris Court of Appeal specified that if the claimant has in his possession confidential elements from the Authority's files, notably because he was part of the proceedings before the Authority, he may use these elements. Finally, in the Eco-Emballages / DKT case (24 September 2009), the Paris Court of Appeal decided that it was not up to the FCA to provide the party/ies with confidential elements from its files, if they already had these elements.
The principle seems to be that, insofar as the use of confidential documents can be subject to sanctions if it is not justified by preservation of the defence’s interests, the parties should bear this risk themselves.
For stand-alone actions, it should be noted that the judge can request that the FCA issue an opinion on competition law issues raised by the case. In practice, the courts often make such a request, and case law shows that they tend to abide by these opinions. In the recent Google / Evermaps case, the Court of Appeal quashed the decision of the Commercial Court of Paris, which had ordered Google to pay €500,000 to Evermaps in damages for anticompetitive practices, on the basis of the opinion issued by the Authority (Paris Court of Appeal, 5 November 2015, n°12-02.931).
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?
Article 1134 of the French Civil Code provides that agreements entered into legally, operate as law for those who engaged in them. In practice, this means that the parties who agree to settle are bound by their agreement, as if it were a contract. The parties who agree to settle expressly waive their right to sue one another on the matter on which they settled. However, third parties are not bound by the terms of the settlement agreement, and can still bring their claim before a civil court.
French law provides that settlement agreements shall be put in writing (Article 2044 of the French Civil Code).
There is no specific mechanism by which a global settlement can be approved or enforced.
7 How long do damages actions take? What is the likely range of costs required to defend a claim?
It is difficult to estimate the length of damages actions as this very much depends on various factors, such as the complexity of the case, the potential intervention of experts or third parties, and whether the first instance decision is appealed before the Appeal Court and eventually before the Supreme Court. In this case, if the Supreme Court overrules the Appeal Court, the latter has to issue a decision, which can eventually be appealed again. This makes the damages actions even longer and more expensive.
Competition damages actions are a form of technical litigation which often requires the intervention of economic experts in order to quantify the damage suffered, and an opinion from the FCA is often requested. On this issue, it is worth noting that the time period necessary for the Authority to give its opinion when asked by the court varies between three and 20 months. In the Google / Evermaps case, for instance, it took the FCA 10 months to issue the opinion requested by the Court of Appeal.
For reasons stemming from the case law, proceedings before the French courts tend to be quite long, ranging from three to more than 20 years. For instance, in the JCB / Central Parts case (Supreme Court, 6 October 2015, n°13-24.854), the claimant brought a claim before the commercial court of first instance in 2004. After numerous appeals and referrals, the case was finally closed by a decision of the Supreme Court in 2015 – 11 years after the commencement of the proceedings.
As regards costs, these mostly depend on the same factors. The serving of a writ and registry costs amount to less than €200. However, many expenses shall be added to this amount: lawyers' fees; cost of in-house counsels; expertise, etc.
It should be borne in mind that the unsuccessful litigant is usually ordered to pay the charges incidental to the proceedings ("dépens"), and the judge has discretionary power to order one party to pay the costs incurred by the other, either because it was unsuccessful or according to equity.
8 What funding options are available for (i) claimants and, (ii) defendants, in your jurisdiction?
On the issue of funding options, a distinction has to be made between natural persons and legal persons. Indeed, while legal aid is provided in France in all types of procedures, including competition damages actions, to individuals with a very low income, legal persons are not eligible for such aid.
Consumers can also benefit from the mechanism of class actions, since these actions are funded by the approved associations which initiate them. In this scenario, consumers do not finance the proceedings out of their own funds, which allows them to benefit from a free and safe legal action.
Legal persons do not benefit from any official funding options. However, alternative options tend to develop, such as independent funds providing financial support to claimants or defendants, in return for a share of the award assuming the case is won (such as AlterLitigation or WeClaim).
It should be noted that "quota litis pacts" are prohibited in France. Lawyers cannot be paid exclusively through contingency fees which depend on the outcome of the trial. Therefore, law firms cannot fund their clients' proceedings and assume that they will then take a part of the damages awarded by the courts.
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 do not anticipate a significant increase in damages actions over the next year or two. The implementation of the EU Damages Directive and the 2014 Consumer Affairs Act is not expected to give rise to a significant increase in the number of cases the French courts deal with.
This is mainly due to the fact that companies which are the victim of antitrust practices often prefer to settle outside of the courtroom, which allows them to obtain better terms of settlement in exchange for their commitment not to sue for damages. Settlement in general is quicker and less costly; for the infringers, it has the significant advantage of remaining confidential.
There might, however, be a small increase due to the development of class actions and the changes brought by the Consumer Affairs Act on the issue of the timeframe. The general statute of limitations in France is five years, from the day the holder of a right knew, or should have known, the event allowing him to exercise this right. This has strongly limited the ability, especially of the indirect purchaser and the consumer, to lodge a claim on time, as they are generally only made aware of the infringement when it comes before the FCA.
Under the new article L.462-7 of the French Commercial Code, the period of limitation is now interrupted by the opening of an investigation before the FCA, another EU Member State’s competition authority or the European Commission. This will prevent a number of actions from being time-barred.
Furthermore, the EU Damages Directive provides that the limitation period shall not begin to run before the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know about it. In practice, the claimant can be expected to know as soon as a claim is brought before a competition authority.
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?
In France, the main element required to improve the effectiveness of the private enforcement of competition law would probably be time. Indeed, the class action procedure described above has not been particularly successful yet, but might develop as consumers become more aware of their interests, and as actions are made public.
As regards class actions, an enlargement of their scope, most notably to SMEs, has also been suggested. Indeed, this type of claimant falls into a sort of "vacuum", whereby they are unable to bring competition damages claims on their own but are not allowed to gather together to initiate a class action.
The EU Damages Directive, which is to be transposed into national law by the end of 2016 at the latest, may also boost the private enforcement of competition law.