Marco Hickey highlights the low volume of competition litigation in Ireland, while providing an overview of ‘discovery’ and the settlement of claims, as well as suggesting reforms to the private enforcement of competition law
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?
We are not aware of any particular sector in Ireland with a reputation for attracting competition damages actions under the Competition Act 2002 (as amended) (“2002 Act”). The right to claim damages for breaches of Irish competition law has been established since 1 October 1991, when the Competition Act 1991 entered into force. However, the volume of domestic competition litigation has traditionally been low across all sectors, so it is difficult to identify any emerging trends.
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?
Section 14 of the 2002 Act sets out that “any person who is aggrieved in consequence of any agreement, decision, concerted practice or abuse which is prohibited under section 4 or 5, or by Article 101 or 102 of the Treaty on the Functioning of the European Union, shall have a right of action under this subsection for relief”. Follow-on actions are facilitated by a provision in the Competition Act 2012 whereby a finding of infringement of competition law by a court (including by way of a guilty plea in a criminal court), will be res judicata for the purposes of any subsequent civil proceedings. Therefore, a plaintiff will only have to prove that the infringement caused harm, and will not have to prove that the infringement occurred. There are currently no provisions for class actions to be taken in Ireland. Representative bodies may bring representative actions on behalf of their members. Representative bodies may seek injunctions or declaratory relief but, since damages must be assessed from the point of view of the loss of the plaintiff, damages cannot be sought on behalf of other parties or even members of an association.
Indirect purchasers, having suffered damage as a result of passing on, can seek to initiate proceedings under Section 14 of the 2002 Act on the basis that they are ‘persons aggrieved’ by a breach of the 2002 Act, but we are not aware of any reported decisions of the Irish courts to date on this point. This can be explained, at least in part, by the low volume of domestic competition litigation proceedings across all types of claims.
3 What approach are the courts taking to claims that originate from investigations or infringements arising out of the jurisdiction?
In terms of recognising investigations and infringements originating outside the jurisdiction, it is important to note that, in Ireland, the conferring on the courts alone of the power to determine competition proceedings, both civil and criminal, and to award damages or impose penalties, reflects fundamental Irish constitutional norms and requirements. Requiring Irish courts to give effect to a decision of a national competition authority (“NCA”) of another State, regardless of whether the NCA in question was a court or an administrative body, may raise constitutional issues in Ireland. This point is relevant for the implementation of Directive 2014/104/EU (“Damages Directive”), whereby a final decision of a national competition authority finding an infringement will automatically constitute proof before the courts of the same Member State in which the infringement occurred. As the rule only concerns decisions that are ‘final’, this represents a concept which will need to be clarified in domestic implementing legislation.
4 Do claimants favour your jurisdiction when they have a choice as to where to lodge a claim? Why?
We are not aware of Ireland having an international reputation for attracting claimants or defendants from other jurisdictions, and the volume of domestic competition litigation has traditionally been low.
5 In practice, are the courts generous to claimants when awarding disclosure, including pre-action disclosure?
Disclosure, known as ‘discovery’ in Ireland, is primarily pre-trial. Pre-action discovery is not common. The rules on disclosure in competition law cases in Ireland are founded on the traditional rules of discovery whereby a party in a civil case, in furtherance of its case, can obtain documents which are in the power, possession or procurement of its opponent. The court may order discovery of any documents which are ‘relevant and necessary’ to the issues in dispute in the proceedings and which are (through their pre-trial disclosure) likely to shorten the length of the trial and/or reduce the parties’ overall costs. Under Irish law, the word ‘document’ is given a very broad definition by the courts so as to include “any thing which, if adduced in evidence at the hearing of the proceedings, would be put in, or become annexed to, the court file…”. Electronic files, including metadata, are regarded as documents for this purpose.
The process of applying for discovery from an opponent takes place pre-trial and will usually commence after pleadings have been exchanged. Discovery is made either on a voluntary basis (where both parties consent), or pursuant to a court order (where one party has refused to voluntarily make discovery). An agreement by a party to make voluntary discovery has the same legal effect as a court order. Requests for discovery in High Court cases must list the precise categories of documents sought and must include the reasons for seeking discovery of each category of documents. At Circuit Court level, documents may be requested in more general terms.
Legal privilege may be asserted over certain types of documents. There are two principal types of privilege. The first is legal-advice privilege, which allows a party to object to making discovery of documents which record legal advice between the party and its lawyers. The second is litigation privilege, which allows a party to object to making discovery of documents which were produced in contemplation of the legal proceedings and/or to deal with the legal proceedings.
Irish courts may direct discovery against non-parties to litigation where it appears to the court that such persons hold documents which are relevant to the proceedings. Non-party discovery tends to be more expensive than inter-party discovery.
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?
In competition law matters, the permission of the court is not usually required before settling an action and, similarly, no consent is required from the Irish NCA, the Competition and Consumer Protection Commission (“CCPC”).
Settlements are normally effected by way of a settlement agreement – which amounts to a fresh contract between the parties – or by way of an order of the court made on the consent of the parties.
A defendant in court proceedings may, in appropriate cases, make a lodgment (payment into court) or a Calderbank offer of a specified sum of money. Lodgments or Calderbank offers may have a tactical benefit, as the claimant may be forced to pay the defendant’s costs if the claimant continues to fully fight the case and the award of damages by the court is less than the amount previously lodged/offered by the defendant.
The use of alternative dispute resolution (“ADR”) (normally mediation facilitated by an accredited mediator) in the settlement of civil cases is increasingly common in Ireland. Using ADR in actions for competition damages means, for example, that the matters are often settled earlier, more cheaply and more confidentially than if the parties had proceeded to a full trial.
If the parties settle the case before the conclusion of the trial, no judgment is normally delivered by the court. Following a settlement between the parties, the relevant court is normally not required to make any order, unless the parties agree to an order being made with their consent. There may sometimes be advantages, such as easier enforcement, if the court affirms the terms of settlement. It is possible that the CCPC might still decide to investigate the matter (or similar matters) if there had been a settlement between the parties which did not involve the CCPC.
As regards enforcing a ‘global settlement’ in Ireland, where several separate claims arising out of the same or similar circumstances are pending against a defendant or defendants, they are sometimes dealt with by way of a single ‘test case’ or ‘pathfinder case’. While the results of such test or pathfinder cases are not binding on parties to the other similar proceedings, the results of such test/pathfinder cases normally offer a very persuasive precedent for the parties to the later sets of proceedings, and usually will heavily influence how the parties deal with the later proceedings and settlement negotiations. Subsequent cases are generally settled on terms similar to the test/pathfinder case.
7 How long do damages actions take? What is the likely range of costs required to defend a claim?
High Court cases typically take between two and three years. Cases in the Commercial Division of the High Court (normally for values exceeding €1,000,000) are sometimes heard in full within 12 to 18 months of commencement.
It is not possible to estimate the costs of defending an action based on the current volume of litigation, especially given that costs can vary greatly depending on factors such as complex facts and evidence, and the need for expert evidence.
8 What funding options are available for (i) claimants and, (ii) defendants, in your jurisdiction?
Funding options for antitrust damages actions are subject to the same restrictions as other types of litigation in Ireland.
First, lawyers in Ireland are not permitted to calculate charges as a specified percentage or proportion of damages. Lawyers may, however, agree to act for uplifts for successful cases, or a reduced fee where an action is unsuccessful.
Secondly, the principles of maintenance and champerty still subsist in Irish law. There has been a view that third-party funding is contrary to the common law principles of champerty and maintenance. These principles prohibit the provision of assistance to a party to litigation by a person who has neither an interest in the litigation nor any legally valid justification for participating in the litigation. It is therefore unlawful for a party without a legitimate interest to fund the litigation of another, or to fund litigation in return for a share of the proceeds. It is normally lawful for shareholders or creditors of a company which lacks funds, to provide funding for litigation, as they have a legitimate interest in the company, and such funding may indirectly benefit them.
As regards costs, there is a rebuttable presumption that the losing party will be required to pay the winning party’s costs. However, the court may refuse to grant a portion or all of the costs to the winning party where it believes that this might lead to some injustice or that there is a public policy reason for not doing so.
Parties initially bear their own legal costs upfront for proceedings, but may subsequently obtain a court order for costs. Costs are normally recoverable pursuant to a court order on a ‘party and party’ basis, which means that only those costs which are regarded as absolutely necessary for the conduct of the action are recoverable. The award of ‘party and party’ costs often means that a party only recovers (from its opponent) a portion of the costs paid to its own lawyers.
Insurance to cover the costs of private antitrust litigation is not readily available but, where it is available, the premium required is very expensive. The lawfulness of after-the-event insurance (“ATE”) is questionable, and remains to be definitively decided upon 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?
The private enforcement of competition law in Ireland is well established and specific provision for such enforcement has been a feature of domestic Irish competition law from the enactment of the Competition Act 1991.
Despite the difficulty and cost of litigation in the Irish courts, there is likely to be an overall increase in civil antitrust litigation and damages awards for EU antitrust breaches in the coming years, under the Damages Directive.
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?
At present, there is no public information suggesting that there are specific reforms planned to the legal regime applicable to private antitrust actions. However, reforms to the areas below would be welcome in allowing Ireland to remain in line with other jurisdictions in terms of the private enforcement of competition law.
Collective and Representative Actions
Irish law already makes provision for instituting proceedings under Order 15, Rule 1 of the Rules of the Superior Courts 1986 where the claims at issue arise out of the same transaction or series of transactions. The joinder procedure can be used to combine actions involving two or more plaintiffs or defendants. Occasionally, the procedure has extended beyond conventional litigation to multiparty actions involving numerous plaintiffs. For the sake of convenience, one or more members of the class can be nominated as first-named plaintiffs. Nevertheless, each class member remains a full party to the proceedings at all times.
The position of ‘representative actions’ is quite different from the situation with regard to collective actions. Section 14(2) of the 2002 Act provides that the CCPC has a right of action in respect of an action, a practice or an abuse which is prohibited by Sections 4 or 5 of the 2002 Act or by Articles 101 or 102 of the TFEU, but the CCPC is precluded from seeking damages.
Furthermore, it is likely that, in some circumstances at least, representative bodies such as trade associations or consumer groups would have sufficient standing to bring proceedings on behalf of their members, seeking declaratory or injunctive relief in relation to alleged breaches of competition law (including Articles 101 and 102), but a claim for damages could not be maintained by such a body (other than in relation to damage suffered by itself). Where members of a representative body have suffered injury, each member is required to sue for damages on an individual basis.
It is a fundamental and long-standing principle of Irish law that a party seeking damages must establish loss and/or injury to it and cannot (save in very limited circumstances such as where the person who has suffered loss or injury is a minor) sue in respect of loss or damage to another party. In Irish law, the principles of maintenance and champerty make it unlawful for a party without a legitimate interest to fund the litigation of another, or to fund litigation in return for a share of the proceeds.
Probative Effect of National Decisions
Pursuant to Article 16(1) of Regulation No. 1/2003, a Commission decision relating to proceedings under Articles 101 or 102 of the Treaty has a probative effect in subsequent actions for damages, and the European Community v Otis and others (Case C-199/11) case confirmed that a national court cannot take a decision running counter to any such Commission decision. The Damages Directive sets down that it is appropriate to give decisions made by national competition authorities (or national review courts) similar effect. The thinking is that requiring a private litigant to re-litigate the same issues in subsequent damages actions is inefficient, causes legal uncertainty and thereby leads to unnecessary costs for all parties.
In Ireland the CCPC, the Commission for Communications Regulation (“ComReg”) (in respect of electronic communications services and networks), the Director of Public Prosecutions (“DPP”) and the courts are designated as competition authorities within the meaning of Article 35 of Regulation No. 1/2003, and exercise different functions as regards the enforcement of Articles 101 and 102. Essentially, the CCPC (and, within its functional area, ComReg) operates the investigatory, prosecution and civil enforcement powers, whereas the courts make legal determinations and may impose fines and give reliefs, such as declaratory relief or the discontinuation or adjustment of a dominant position, and damages.
Legal Consequences of the 'Passing on' of Price Increases
The Damages Directive makes certain changes to account for the legal consequences of the 'passing on' of price increases to ensure that claims by both direct and indirect purchasers do not lead to overcompensation. The ‘passing on’ defence has not been raised in any Irish reported case law to date but, on the basis of general principles, it may be possible in theory. Irish rules for civil actions concerning a breach of competition law see damages as generally being assessed on the basis of injury suffered. The general approach is to leave the method and rules as to the calculation of damages to the courts. Where a person seeks damages for infringement of Articles 101 and/or 102 in Ireland, Irish courts have to apply European jurisprudence, including the requirements described in Manfredi (Case C-295/04), which require damages for actual loss and for loss of profit.