JONES DAY TALKS®: Private Antitrust Litigation in Spain
Jones Day’s series on private enforcement actions relating to antitrust matters in Europe turns to significant developments in Spain. Raimundo Ortega and Antonio Canales explain why antitrust actions in Spain have increased, discuss how damages are disputed and quantified, and review the key takeaways from the high-profile Truck Cartel and Paper Envelope Cartel matters.
Podcast: Play in new window | Download
SUBSCRIBE TO JONES DAY TALKS®
Subscribe on Apple Podcasts
Subscribe on Android
Subscribe on Google Play
Subscribe on Stitcher
Read the full transcript below:
Dave Dalton:
Jones Day's series on private enforcement actions, relating to antitrust matters in Europe is moving to Spain. We'll talk with Jones Day's Raimundo Ortega and Antonio Canales about why these actions have escalated in Spain during recent years. And we'll discuss the significance and impact of the truck cartel and paper envelope cartel matters. I'm Dave Dalton. You're listening to Jones Day Talks.
Dave Dalton:
Raimundo Ortega handles complex antitrust and regulatory matters with extensive experience in infrastructure and energy. He is currently advising on several cartel investigations, including leniency applications and damage claims before the Spanish competition authority and the Supreme court. He also has extensive experience in merger regulation, including phase two transactions with remedies and abuse of dominant position investigations.
Dave Dalton:
And for more than 10 years of counsel, Antonio Canales has represented local and international clients on civil and commercial arbitration and litigation proceedings before the principal arbitration courts and Spanish civil and commercial courts. He is also active in administrative judicial proceedings, including liability of public administration, energy regulatory matters planning and antitrust infringement proceedings. Raimundo, Antonio, thanks so much for being here today.
Antonio Canales:
Thanks, David.
Raimundo Ortega:
Thanks, David.
Dave Dalton:
All right, let's go to Raimundo first. Raimundo, historically Spain has a jurisdiction where there have not been many actions for damages for competition law infringements. Why is that?
Raimundo Ortega:
Yeah, David. Spain is one of the jurisdictions in which, traditionally, there have not been many actions for damages for competition or infringement. This is due to two reasons: first, the lack of effective class actions, which enable consumers in particular to claim damage for antitrust infringement. Second, the difficulty of quantifying the amount of the damage suffered. And third, the deterrent effect of the loser-pay-the-fees principle.
Dave Dalton:
Explain the last one. The what principle? I'm sorry, Raimundo.
Raimundo Ortega:
Loser-pay-the-fees. So the one that the claim is rejected needs to pay the fees of the other one.
Dave Dalton:
Gotcha. Okay. Loser pays has not made it to the United States yet, but I'm very familiar with the concept from various jurisdictions. Now, all that said, Raimundo, things have changed recently. Tell us about the truck cartel situation and its impact on private antitrust litigation in Spain.
Raimundo Ortega:
Yes, you're right. The situation has changed recently in the wake of the truck cartel. After the commission decision in April 2017, Spanish courts have received thousands of claims. According to the 2020 statistics, there are already more than 400 decisions hunted down by the Spanish community of courts, and the high provincial courts have already resolved more than 50 appeals. As smaller percentage of this ruling have been dismissed, either for lack of a standing to suit or because the action was considered [inaudible 00:02:59]. However, most of the judgements, I would say around 80%, are being upheld with the barriers of trucks [inaudible 00:03:06] to be entitled to compensation because they paid an extra cost in the purchase of the trucks. However, there are differences between the courts in relation to their overprice. We find groups of judgment with a 5% overprice or there's a 10, and even 15.
Dave Dalton:
Interesting. So given this activity, you expect more cases in the future to come forward?
Raimundo Ortega:
Yes, indeed. Following the truck cartel and all the cartel litigations, such as the envelope case that will be discussed later on, where damages have been indeed awarded, potential harm companies will be encouraged to go to court, that's for sure.
Dave Dalton:
It will be interesting to watch how this develops. Let's go over to Antonio for a moment. Antonio, talk about the EU damages directive and how Spanish law treats the prospect of retroactivity.
Antonio Canales:
Yeah. Thank you, David. Spanish law provides for the non-retractivity of the new provisions introducing the law implementing the directive on damages. The question arises as to whether the non-retractivity applies only to those infringing conducts that have been declared unsanctioned prior to the publication of the new system in May 27th, 2017, or whether it also applies to those conducts that took place prior to the entry into force of the new system. But they've not been investigated by the authority or being a [inaudible 00:04:29] at the investigation [inaudible 00:04:31] after the new system entered into force. In our view, the debate should also be around the criteria used to determine the applicable law to claims filed after the new regulation entering into force, but referred to infringements or authoritative additions which took place or were rendered prior to that date.
Antonio Canales:
Currently, most courts are prone to determine the applicable law in terms of when the infringement took place and ceased, therefore claims filed after the new regulation enter into force, but who's underlining infringement took place before that day, would fall under the civil code. And it's one year limitation period. The case law has said that this period will begin on the day of the publication of the non-confidential version of the competition authority decision, but it may also be possible to support in certain cases that this period starts well before that date. For example, when the statement of objections was issued by the competition authority, because at that time, the elements were known in order to be able to file the legal action.
Dave Dalton:
Sounds like timing is everything in this case, really is very important, very important. Back to Raimundo, talk about the types of actions being taken in Spanish courts. Are they similar to the actions brought in other European jurisdictions?
Raimundo Ortega:
It did, David. In line with you legislation, we have to stand alone and follow actions in Spain. Recently, we have seen claimants trying to file what we call hybrid actions. By hybrid, I mean follow on actions relying on an infringement decision of the Spanish competition authority, which has not become final. And this has been done in order to obtain faster and more favorable results. And so far, and this is important, the sanctions have not been fully rejected by the Spanish courts. We are also seeing some claimants trying to include the administrative file in the complaint, and even so I need to include the leniency application. However, this kind of behaviors with the limited by the recent reform of the Spanish competition regulation in April, 2021, when implementing the ECN+ directive. This reform has [inaudible 00:06:50] the confidentiality of leniency applications and will therefore prevent future claimants from accessing confidential documents with which to prepare private damage claims.
Dave Dalton:
Interesting. If you don't mind, talk more about what happened in April, just this last April, a couple months ago. April, 2021, the reform, and how does that impact these actions moving forward?
Raimundo Ortega:
Well, in April, 2021, Spain implemented the ECN directive, and in fact, was one among the first EU member states to implement. And this directive has among one of the principle or main goals to make so that the leniency applications, which basically you may know, David, is the recognition by a party participating in a cartel that infringement has occurred in order to obtain a reduction of the fine. Well, that document must remain with a Spanish antitrust agency, and therefore, should not be, under any circumstances, to move to a court that is dealing with private actions. So basically, the Spanish reform is even making more difficult that leniency application to move from the Spanish agency to the courts.
Dave Dalton:
Interesting. Okay. All right. Well, thanks. That's great clarification. Thank you. Let's go back to Antonio and talk about quantifying damages in the use of expert reports. Now, it shouldn't surprise anybody, Antonio, the defendants and plaintiffs tend to have very different views regarding quantifying damages. Talk about how this typically works.
Antonio Canales:
Yeah, of course. Defendant and plaintiff have different views on this, of course. We've seen that in claims for damages for infringement of competition law in Spain, the expert report filed by claimants usually estimate the damage to around 20, 25%. On the other hand, defendants tend to deny the system of damage, or in case of recognizing damage, to file an expert report with a counterfactual scenario in which they made their own estimate of damage, usually pretty close to 0%. Therefore, the expert reports [inaudible 00:08:59] pardons in this tab of procedures. We could also add some notes with regard to this reports as set out by the Supreme court in Spain.
Antonio Canales:
For example, on the side of the plaintiff, we've seen that the key question, the quantification of damages for anti-competitive infringement, is to determine what would've probably happened without infringement. Indeed, some course, like Provincial Court of Madrid, that's explicitly consider that the counterfactual scenario must be raised as a requirement. On the other side, with regard to the defendant, it is not sufficient that the counter report is limited to questioning the validity of the report which is being challenged, but it must also justify a [inaudible 00:09:46] alternative quantification. The counter report is therefore a very important so far, as in several judgements, the defendant has been criticized for not having offered an alternative evaluation criteria because the reporter was based solely on the premise of the non-existent of the damage.
Dave Dalton:
I see. Talk about how the courts tend to view these damages a little bit more, if you would. What trends do you see there, Antonio?
Antonio Canales:
Sure. Spanish courts have recognized that there is a presumption of damage. If the conduct been qualified as anti-competitive. However, it must be taken into consideration that this presumption does not mean, of course, that damage to the plaintiff will be deemed to be proven in every case. The defendant is therefore allowed to prove otherwise. However, due to the nature of these procedures, there is a great difficulty to prove in order to quantify the damage. And it is often the judge who carries out this quantification from the material provided by the parties to the procedures. And the damage is there for fixed in a judicial manner. In this respect, we can't distinguish between different courts and criteria.
Antonio Canales:
For example, the Provincial Court of Barcelona seems to have tended to make more use of the moderating polar of judges when quantifying damages, and therefore, they could accept a position which could be closer to the one who's requested by the claimant. And with regard to the Provincial Court of Madrid, for example, on the other hand, this court has maintained a position farther away from the judicial moderation of the damage. These court, for example, considered that the damages will be fixed according to the expert report provided by all the parties.
Dave Dalton:
Interesting. Okay, but talk about... We were exchanging some notes preparing for this program. The truck cartel matter was different than what you've just described. Is that correct?
Antonio Canales:
Yeah, absolutely. In the famous truck cartel, different courts have used different criteria to quantify the extra costs that the cartel cost to the victims. In general, smaller percentages have been used than in other cartels. We've seen courts establishing general criteria of 5%, cost over run. Since all the courts have departed from this percentage and has established 15%, the highest 10%. And very recently we've seen an interesting rule in the context of this truck cartel. It was rendered in April, 2021. This decision has upheld the expert reports submitted by the defendant, which concluded that there was no extra cost. It has dismissed the plaintiff report, considering that it was not convincing or robust. In other words, in the worst of the court, the report has not exceeded that jurisprudence standard required of the plaintiff's expert opinion.
Dave Dalton:
Interesting. Let's stay with the truck cartel just for another moment. What else made this case so noteworthy and complex, Antonio?
Antonio Canales:
Well, I think that despite the multiple cases of damages claims that have been hurting Spain, none has been more outstanding than the truck cartel. And the impact of the truck cartel has resulted in more than 180,000 claims filed in Spain.
Dave Dalton:
Wow.
Antonio Canales:
And then number of trucks affected by the cartel is estimated at 360,000 according to the Spanish Confederation of Freight Transport. The complexity surrounding the quantification of the damage is probably one of the most relevant and controversial issues of this case. And furthermore, the lack of information available for the plaintiff exercise a follow-on action for compensation stands as an important challenge in the decision of this type of procedures.
Dave Dalton:
Let's go back to Raimundo for a second. We can start to wrap up this conversation a little bit with some information on another prominent case. Raimundo, tell us about the paper envelope cartel and what made that significant.
Antonio Canales:
Yes, I mentioned this case at the beginning of the podcast. In March, 2013, the antitrust agency [inaudible 00:14:11] on several paper envelope manufacturers for their participation in a price-fixing, bid rigging, and market sharing cartel that took place in Spain between the 70s and 2010. Several affected consumers sued cartel participants before the commercial courts of Madrid and Barcelona, requesting compensation for damages. In June, 2018. The first three judgements were rendered, two in Madrid and one in Barcelona. This is interesting because despite of the claims on the expert reports were substantially the same, the court arrived to contradictory conclusions. The Madrid court ruled in favor of the defendant and the Barcelona court ruled in favor of the plaintiffs. Antonio just discussed briefly a few minutes ago about this. The ruling handed down by the Barcelona commercial court, inspired by the sugar cartel of [inaudible 00:15:10], it states that, in cartel, the presumption of damage is valid and allows the judge to reverse the burden of the proof against the catalyst, provided, and this is very important, that the plaintiffs present before the court a feasible and reasonable calculation of damages through what we call hypothetical counterfactual scenario.
Antonio Canales:
What is this? Well, it's an analysis made by the economists of a market in which there would not have been a cartel. That doctrine results in a variation of the burden of proof. Now, the burden of the members of the cartel to demonstrate that the competitive practice did not cause a damage to the plaintiff in that particular scenario. Moreover, it is not sufficient to argue that the plaintiff economic report is not feasible and reasonable. The approach of the judgment of the Madrid commercial court differs slightly from that of the Barcelona judgment.
Antonio Canales:
This seems to be viewed to the use of the same expert report analyzing an hypothetical contract factory scenario, but based on price fixings when the conduct affected the Madrid plaintiffs have to do with market sharing. And in Madrid, the judgment, it stays very clear. When this missing the expert report that in a market sharing conduct, there is no agreement on the [inaudible 00:16:29] of prices to be charged to end consumers. Therefore, since the claimant did not demonstrate a market sharing conduct, because he was focusing in another topic, the court found that the expert report was insufficient to award damages.
Dave Dalton:
Very good. This been a great discussion, covered a lot of content in a short amount of time, so thank you so much for being here. Let's wrap up with this though. Raimundo, is there any last information you'd like to share about the current situation in Spain relating to private antitrust litigation? Any key takeaway you'd like to leave our listeners with?
Raimundo Ortega:
Yeah, David. Something would like to add about the current situation in Spain relating to private antitrust litigation is that we are seeing more and more innovation in the strategies of both claimants and defendants. And this will test whether the [inaudible 00:17:19] system we have in Spain works or needs some tweaks.
Dave Dalton:
Well, good, real good. Raimundo, Thank you so much for being here. Antonio, thank you as well. A great discussion. This is the sixth in this series of private antitrust litigation Jones Day Talks podcast, and it's going to be a great addition. It's a great series. So thank you so much for helping out on this. It was a great program and great talking with you both today.
Raimundo Ortega:
Thank you, David. It was a pleasure.
Antonio Canales:
Thank you, David.
Dave Dalton:
Jones Day Talks Private Antitrust Litigation in Spain was part of our continuing series of podcasts on private antitrust litigation in Europe. Watch for more to come, including a global round table program that will include lawyers representing numerous jurisdictions. You can find complete bios and contact information for Raimundo and Antonio at jonesday.com. And while you're there, be sure to visit our insights page. It's updated constantly with more podcasts, videos, publications, newsletters, blogs, and other useful content. Subscribe to Jones day talks at apple podcasts or wherever you get your podcasts. Jones Day Talks is produced by Tom Kondilas. As always, we thank you for listening. I'm Dave Dalton. We'll talk to you next time.
Speaker 4:
Thank you for listening to Jones Day Talks. Comments heard on Jones day talks should not be construed as legal advice regarding any specific facts or circumstances. The opinions expressed on Jones Day Talks are those of lawyers appearing on the program and do not necessarily reflect those of the firm. For more information, please visit jonesday.com.
