Hungary - The Strategic View - Competition Litigation 2016

Anikó Keller provides an overview of the processes and procedures governing damages claims in Hungary, and highlights key areas of the legislation that could be revised to better regulate the lodging of claims

Contributing firm

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? 

No.  Competition damages actions are rather rare in Hungary.  Among the reasons for this, legal literature often refers to the lack of effective legislation in respect of key elements necessary to successful private enforcement claims (such as statute of limitation, disclosure of evidence and lack of collective redress mechanisms).

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?

Since there is no up-to-date, official and publicly available database of cases, it is rather difficult to draw any conclusions in this respect.  The number of the cases known by the public, however, suggests that it is not consumers who tend to litigate, but rather undertakings in cases where the amount of the alleged damage suffered as a result of a competition law infringement may be more significant.

3       What approach are the courts taking to claims that originate from investigations or infringements arising out of the jurisdiction?

The statement on the existence of an infringement, made in the decision of the Hungarian Competition Authority against which no action has been filed, or in the decision of the review court, shall be binding on the court hearing the lawsuit according to the Hungarian Competition Act (Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices).

In addition, the Hungarian Competition Act also sets forth that if, during any phase of the lawsuit, the Hungarian Competition Authority notifies the court that it has started competition supervision proceedings in the case in question, the court shall suspend the proceedings until the expiry of the time limit for filing an action against the decision adopted in the competition supervision proceeding, or if an action has been filed, until the final, non-appealable conclusion of the judicial review.

No suspension is necessary if the Hungarian Competition Authority has already adopted a final, non-appealable decision in the case or it has otherwise terminated its proceedings with final, non-appealable effect, and no judicial review of the resolution of the Hungarian Competition Authority was requested, or the judicial review has already been concluded by a final, non-appealable decision.  In such a case, the Hungarian Competition Authority shall send to the court its final, non-appealable decision or the final, non-appealable decision that was adopted as a result of the judicial review.

4       Do claimants favour your jurisdiction when they have a choice as to where to lodge a claim? Why?

Based on the insignificant number of claims lodged, Hungary does not seem to be a favoured jurisdiction for lodging claims.  The reasons may be in connection with the lack of effective legislation in respect of key elements necessary to successful private enforcement claims, as mentioned above in our response to question 1.

5       In practice, are the courts generous to claimants when awarding disclosure, including pre-action disclosure?

The uncertainties relating to the access to evidence may be one of the reasons why we do not see many private enforcement cases in Hungary.

A discovery procedure of the type available in litigation before UK courts is not known in Hungary.  As a general rule, in the civil procedure initiated by the injured party (the plaintiff) to claim damages, the plaintiff must evidence its statements.  As an exception to this general rule, as per the plaintiff's request, the court can order the defendant to submit documents to the court if those documents were to be presented pursuant to the rules of (substantive) civil law.  This is the case if, for example, a document was created for the benefit of the proving party or if it certifies a legal relationship pertaining to the proving party or relates to the negotiations on such legal relationship.

In the case of documents included in the case file of authorities or courts which cannot be obtained from the other party or third parties, upon the party's request the court may arrange for the acquisition of the documents.  In the case of such a request by the court, the authority, e.g. the Hungarian Competition Authority, must provide the court with the documents requested, even if such documents qualify as a business secret.

Also, there is no general rule for disclosure by third parties.  If, however, a third party is summoned by the court to testify as a witness, it may be obliged to produce any document in its possession.  The third party witness may refuse to testify and to produce documents if by doing so it would infringe upon its duty to keep business secrecy.

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?

Settlements concluded before courts underlie the general rules of civil procedures.  If the settlement is in line with the relevant statutory rules, the court proceeding in the case approves the settlement of the parties to such procedure.  Such settlement has the same effect as the judgment of the court.  Should the settlement not be in line with the relevant statutory rules, the court denies approval and continues the procedure.

7       How long do damages actions take? What is the likely range of costs required to defend a claim?

The average duration of commercial civil proceedings before the courts of first instance is between one and two years, while appeal proceedings can take even longer.

As for the costs of the procedure, there is a duty fee, payable as general rule when initiating the procedure, which amounts to 6% of the value of the claim but at most HUF 1,500,000 (approximately EUR 4,900).  In the case of an appeal, an additional duty fee is payable which is 8% of the value of the claim but at most HUF 2,500,000 (approximately EUR 8,000).  In addition, costs relating to the appointment of experts by the court (which may be significant) must be advanced by the party who initiates such evidencing, i.e. as a general rule, the plaintiff who bears the burden of proof.  (Even if there is a final and enforceable decision of the Hungarian Competition Authority for the competition law infringement, the party claiming compensation for damages must prove both (i) the amount of damage suffered, and (ii) the causal link between the damages suffered and the prohibited restrictive agreement or practice.)

8       What funding options are available for (i) claimants and, (ii) defendants, in your jurisdiction?

As a general rule, the parties to the litigation bear the costs of the litigation.  In theory, third-party funding is possible; however, such commercial solutions are not typical.

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?

The implementation of the EU Damages Directive may bring some developments in this regard; however, it is difficult to anticipate whether the implementation will bring a significant increase in damages actions over the next one or two years.

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 our view, the implementation of the rules of the EU Damages Directive, in particular those relating to statute of limitation and disclosure of evidence, are a crucial step forward in improving the effectiveness of private enforcement of competition law. 

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