This country-specific Q&A provides an overview to Competition Litigation laws and regulations that may occur in Sweden.
What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
The Competition Damages Act (2016:964) (the “Competition Damages Act”) governs actions for damages for infringements of competition law provisions. Chapter 3, Section 25 of the Competition Act provides a right to damages for parties injured because of infringements of Chapter 2, Sections 1 or 7 of the Competition Act or Articles 101 or 102 TFEU. The basic antitrust prohibitions in Swedish competition law mirror the prohibitions in Articles 101 and 102 of the Treaty of the Functioning of the European Union (TFEU), and include prohibitions against agreements between undertakings that restrict competition (Chapter 2, Section 1 of the Competition Act); and abuse of a dominant position (Chapter 2, Section 7 of the Competition Act).
What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
Anyone who has suffered damage caused by anticompetitive behaviour may file for damages. Standing is not limited to those directly affected by the anticompetitive behaviour and indirect purchasers may also bring claims. As mentioned above, corporations and individuals from other jurisdictions may also bring claims before a Swedish court provided that they are considered undertakings within the meaning of the Competition Act (i.e., a natural or legal person engaged in activities of an economic or commercial nature). It is not necessary for a competition authority to have issued a finding of an infringement before a private antitrust action is initiated.
What remedies are available to claimants in competition damages claims?
The remedy that is available according to the Competition Damages Act is damages for actual loss and loss of income, including interest. Sweden does not recognise punitive damages.
In general, the losing party in a legal action also bears the legal costs. The winning party can thus recover all reasonable litigation costs from the losing party. The costs may also be apportioned between the parties depending on the degree of success of each party.
The ordinary rules on interim security measures apply.
What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
A prerequisite for receiving compensation is that the competition prohibitions were infringed wilfully or through neglect. Compensation for damage caused by an infringement includes compensation for actual loss (financial loss or loss of, or damage to, property) (damnum emergens) and loss of income (including loss of interest) (lucrum cessans). The objective of damages awards for infringement of competition law is to restore the claimant’s financial situation to that which it would have been had the infringement never occurred. Therefore, when setting damages, the courts will compare the claimant’s actual financial situation with the hypothetical financial situation absent the infringement. Compensation will also reflect other detrimental effects on the plaintiff’s business, even those of a more long-term or difficult-to-quantify nature (such as loss of goodwill or detrimental impact on an intellectual property right).
The amount of the damages can be reduced if the plaintiff has contributed, by fault or negligence, to the injury sustained. If the plaintiff has benefited from the infringement, this too would have an impact on the amount of damages awarded. Compensation will also be adjusted for any settlement or agreement between the parties. Fines imposed by competition authorities, however, are not taken into account when determining damages.
The Competition Damages Act stipulates that interest will accrue on the compensation amount, due from the time the damage occurred. The interest rate is 2 per cent above the reference rate of the Central Bank from the time the damage was caused until legal proceedings to claim compensation were initiated. Thereafter, the interest rate is 8 per cent above the reference rate.
As a general rule, if there is more than one infringer, the infringers are jointly and severally liable for damages caused by their infringement. Under Swedish law, the term ‘joint and several liability’ means that if several parties are liable for damage caused by them, then a claim can be brought against any of them for the same amount as if that party had been liable for the damage (i.e., the whole amount). However, the Competition Damages Act includes certain limitations on joint and several liability, such as when the infringer’s market share, at any point in time during the infringement, is below 5 per cent or where the infringer has been part of a leniency process. It is also not possible to be jointly liable for a damage if one party enters into a settlement with the party seeking damages.
The infringers’ part of the damage shall be calculated considering the respective infringers comparative responsibility for the damage that was caused by the infringement according to Chapter 4, Section 1 of the Competition Damages Act.
A leniency applicant is only jointly and severally liable for damages that have occurred for direct or indirect buyers or suppliers and other damages parties, unless the damage can be covered by any of the other infringers.
What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
The Competition Damages Act stipulates a limitation period of five years from when the infringement ceased and the claimant became aware of, or would reasonably have been aware of, the anticompetitive behaviour, that this behaviour caused damages and the identity of the infringer. Previously, there were also no rules on a standstill or interruption of the limitation period during the time that a competition authority investigated the issue or while legal proceedings were conducted. Such rules are now included in the Competition Damages Act, stipulating that a limitation period is suspended while a competition authority takes actions in the case of the infringement to which the claim relates. A new limitation period of five years commences from the day when there is a legally binding decision on the infringement or if the authority concludes its investigation in another manner.
Which local courts and/or tribunals deal with competition damages claims?
Since September 2016, the Patent and Market Court has jurisdiction over competition damages actions as well as competition cases brought by the Swedish Competition Authority. The Patent and Market Court of Appeal is the court of second, and final, instance in such cases.
How does the court determine whether it has jurisdiction over a competition damages claim?
Infringements of competition laws may cause damage in several jurisdictions. The EU Damages Directive does not regulate these jurisdictional issues. In Sweden, it will be the Brussels I Regulation and the Lugano Convention that regulate whether the Patent and Market Court has jurisdiction in a private competition case involving EEA members. In cases involving non-EU states, there is no general rule determining whether Sweden has jurisdiction or not, so cases are evaluated on a case-by-case basis, but, basically, Swedish forum rules follow the general principle that actions should be brought in the state where the defendant resides or has its seat. Alternatively, the Patent and Market Court also has jurisdiction if the infringement took place or if the damage occurred in Sweden. Swedish courts do also recognise prolongation agreements, where the parties – if at least one of them is domiciled in a Member State – have agreed that Swedish courts should have jurisdiction to try a claim for antitrust damages.
As long as Swedish courts have jurisdiction, private actions may also be brought against foreign corporations or individuals and by foreign corporations or individuals. However, it should be noted that foreign (non-EEA domiciled) claimants may, if the defendant so requests, be required to provide security, usually in the form of a bank guarantee, covering all legal costs that may be borne by the defendants.
How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
As regards the choice of law, in cases involving companies from within the EU, Swedish courts will apply the Rome I Regulation Articles 4–8 to cases where the parties have a contractual relationship and the Rome II Regulation where the claim regards indirect damages, that is, Article 4.1 (the law of the country where the damages arose), Article 6.3 (where markets have been affected or are likely to be affected) or, where competition in several countries has been or is likely to have been affected, Swedish law, if a market in Sweden has been directly and substantially affected.
Swedish case law has adopted principles giving injured parties’ a significant easing on the burden of proof in situations when proffering precisely specified items of supporting evidence is particularly difficult or can unduly impede the effective exercise of the right to compensation guaranteed by the TFEU. To remedy the information asymmetry, the Competition Damages Act also includes a presumption that cartel infringements have caused damage. The presumption stands unless it is rebutted. It should be noted that the presumption only applies to the existence, and not the extent, of the damage.
To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
The Competition Damages Act stipulates that a finding of a breach of the provisions in the Competition Act in a final ruling may not be re-examined in a subsequent action for damages. This is a change from the earlier Swedish legal tradition, which considered judgments as only binding between the parties and as an evidentiary fact (which can be rebutted) in all other cases.
Final decisions by foreign competition authorities or review courts are regarded as prima facie evidence of the fact that an infringement of competition law has occurred in a subsequent damage proceeding.
To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
A private damage action can proceed while a related public enforcement action is pending. The claimant cannot, however, rely on the evidence that a public enforcement decision entails and instead has to prove the infringement itself. It is also possible for the court to stay proceedings in a private enforcement case in order to await a judgment in another case, e.g. public enforcement, if the subject matter of such a case is of exceptional importance in the private enforcement case.
According to the Competition Damages Act, a private damages action may be suspended by the court if two or more parties have started settlement discussions that relate to claims that are relevant to the case at hand. The case should be resumed before the court within two years from when the court decided to stay proceedings.
What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
The Competition Damages Act, Section 2, mandates class actions. Such class actions shall be brought in accordance with the Class Action Act, which already previously mandated class actions for competition damages. No antitrust class proceedings have thus far been brought in Sweden.
There are three forms of class actions:
a. A private class action may be initiated by any person or entity, provided that such person or entity has a claim of its own and is a member of the class.
b. An organisation class action may be brought by certain organisations without them having claims of their own. Such actions may be initiated by consumer and labour organisations, and must, as a general rule, concern disputes between consumers and providers of goods or services.
c. A public class action may be initiated by an authority authorised by the government to act as plaintiff and litigate on behalf of a group of class members. This form of action is intended to allow authorities to pursue claims where the public interest, in a broad sense, suggests that action should be taken.
Bringing a class action requires that the questions of fact must be common or similar to the entire class. Further, the group of claimants must be ‘suitable’ with regard to size and character, and be well defined to enable individuals to establish whether they are covered by the class action.
Claimants in private class actions and organisation class actions must, in general terms, be represented by a member of the Swedish Bar Association.
Note that collective settlements require judicial authorisation: the court must approve any settlement entered into by the plaintiff on behalf of the group members. Such approval will be given unless the terms of the settlement are unreasonable or discriminatory.
In practice, the procedural questions regarding whether class actions will be approved take considerable time to decide, and in one case pertaining to another subject matter had to be finally settled by the Supreme Court several years later. The practical obstacles have, therefore, meant that there have been only a few class actions and none for antitrust damages. For the first 10 years since the Class Action Act was enacted we are aware of only approximately 10 cases in total.
The main benefits of class actions are the cost-sharing aspect, and that in some cases, the initiation of preparatory acts to gather members for a class action has proved to have a strong effect on the defendant’s will to enter into settlement negotiations.
Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
When quantifying damages, the passing-on defence is available in principle. Swedish law only recognises a right to compensation for actual damage. Thus, the compensation should be reduced by an amount equivalent to any overcharge the injured party has passed on to its buyers or any undercharge the injured party has passed on to its suppliers. It is the defendant who has the burden of proof to show that the overcharge has been passed on. An earlier judgment from a Swedish or foreign court addressing the passing-on question will be given evidentiary effect in a case before a Swedish court.
In relation to indirect buyers or suppliers, the Competition Damages Act provides a rule corresponding to Article 14 of the Damages Directive, stating that when calculating the compensation, an overcharge (or a surcharge) will, unless otherwise proven, be considered to have been passed on to an indirect buyer (or supplier) if the infringement caused an overcharge (surcharge) for the direct buyer (or supplier). Thus, an indirect buyer is only required to prove that the defendant has infringed competition law provisions, that the infringement has led to an overcharge, and that the indirect buyer has purchased the goods or services covered by the infringement or goods and services that include goods and services covered by the infringement.
Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
Swedish courts may, at the request of one of the parties, appoint experts, e.g. economists to establish violations and prove damage. The courts may also, at the request of a party, request that the Competition Authority calculates the damage, but the Competition Authority has a right to refuse to provide such assistance.
However, the most common alternative is that the parties use their own economic experts. If more than one party introduces expert witnesses, they are either heard on their own or jointly, the latter being a process known as ‘hot tubbing’.
A court appointed expert may not have any conflict of interest towards any of the parties. If a person has agreed to be appointed by the court, he/she may not subsequently withdraw from the assignment without valid cause. A court appointed expert has the same duty to testify as a witness, but it not required to divulge any trade secrets. A court appointed expert shall submit a written statement prior to the hearing. A party appointed expert is only required to do so if the other party requests so. A court appointed expert is first questioned by the court, and then by the parties whereas with party appointed experts, the party invoking the expert starts the examination.
Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
Competition law cases before the Patent and Market Court shall be heard by two legally trained judges and two economists. The process before the Patent and Market Court follow the standard civil procedure with a written and an oral phase. However, it is important to remember that as a main rule only what is brought forward during the oral hearing can form the basis of the judgment.
Cross-examinations are allowed and, contrary to what is allowed for the first witness examinations, leading questions are allowed during cross-examination.
How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
There is no statutory deadline set for how long it takes from when a summons application is delivered to the Patent and Market Court before the oral hearing takes place. However, it generally takes about one to three years before the a final judgment is delivered at first instance.
A judgment from the Patent and Market Court can be appealed to the Patent and Market Court of Appeal subject to the granting of a leave to appeal. In addition, if the Patent and Market Court of Appeal has given its consent to the judgment being appealable to the Supreme Court can such an appeal be made. If such consent is not provided for in the judgment, the judgment of the Patent and Market Court of Appeal is final. Due to this specific structure, it can be considered that if the Patent and Market Court of Appeal provides for the possibility to appeal a judgment to the Supreme Court, the judgment will be appealed.
It is likely that the amount of cases regarding competition damages will increase in the following year, especially appeals due to the likelihood of the Patent and Market Court of Appeal annulling the Patent and Market Court’s judgment. Please see question 25.
Do leniency recipients receive any benefit in the damages litigation context?
There are limitations concerning what evidence that can be invoked against companies that have been part of a leniency process and their joint and several liability is also limited. As noted above, the term ‘joint and several liability’ means that if several parties are liable for damage caused by them, then a claim can be brought against any of them for the same amount as if that party alone had been liable for the damage (i.e., the whole amount). However, in relation to an undertaking that has been part of a leniency process, the obligation to pay compensation is limited to the loss that it has caused its direct and indirect buyers and suppliers. As regards damage caused to other parties than that undertaking’s direct or indirect buyers or suppliers, its responsibility is limited to an amount corresponding to its share of the damage.
How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
The objective of damages awards for infringement of competition law is to restore the claimant’s financial situation to that which it would have been had the infringement never occurred. Therefore, when setting damages, the courts will compare the claimant’s actual financial situation with the hypothetical financial situation absent the infringement. Compensation will also reflect other detrimental effects on the plaintiff’s business, even those of a more long-term or difficult-to-quantify nature (such as loss of goodwill or detrimental impact on an intellectual property right).
It follows from the EU Court of Justice judgment in Kone that umbrella effects should be recognised.
Interest is calculated from the day the damage occurred until the day the damages are paid. The main rule is that the interest amount is calculated based on Section 5 of the Interest Act (reference rate plus 2 per centage points). However, in certain circumstances the interest amount can be calculated according to Section 6 of the Interest Act (reference rate plus 8 percentage points).
Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
If a company has paid more than its share of the damages, that company has the right to be compensated from one or several of the other infringers up to the amount representing the infringer’s part of the damage.
In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
A competition damages claim can be disposed of if the parties settle and the claimant withdraws its case. The settlement can also, at the parties’ request, be established in an enforceable judgment.
What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
Collective settlements require judicial authorisation, the court must approve any settlement entered into by the plaintiff on behalf of group members of a class action. A collective settlement can include parties outside of the jurisdiction if they are members of the class action. Such approval will be given unless the terms of the settlement are unreasonable or discriminatory.
Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
In general, the losing party bears the legal costs. The winning party can thus recover all reasonable litigation costs from the losing party, this includes costs for legal, expert and court fees. The costs may also be apportioned between the parties depending on the degree of success of each party.
In the case of class actions, where the defendant is liable for the claimant’s litigation costs but is unable to pay, group members have a duty to use the received compensation to pay for the claimant’s litigation costs.
Under Swedish law, a non-EEA resident that brings an action before a Swedish court against a Swedish national or legal person must, at the defendant’s request, furnish security to guarantee payment of the costs for the judicial proceedings, in the event that such person or company is ordered to reimburse the costs.
Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
Litigation may be funded by third parties. There is nothing hindering claimants or defendants from deciding to share the cost between themselves, although they are as a rule held jointly and severally liable for the legal costs of the counterparty.
The Swedish Bar Association does not accept contingency fees, with one exception. Within a class action framework, a claimant may agree with his or her counsel (who must be a member of the Swedish Bar Association) that a fee should depend on the outcome of the case. Such an agreement will, however, require the approval of the court.
Note that in the case of class actions, where the defendant is liable for the claimant’s litigation costs but is unable to pay, group members have a duty to use the received compensation to pay for the claimant’s litigation costs.
What, in your opinion, are the main obstacles to litigating competition damages claims?
The main obstacles in litigating competition damages relates to evidence; the ability to show damages and to quantify damages.
The ability to show damages is particularly difficult in situations of passing-on, when undertakings are passing on price increases down the supply chain. Consumers and undertakings to whom actual loss have been passed on have suffered harm, but if they did not purchase from the infringer, it may be particularly difficult to prove the extent of the harm.
The qualification of harm can constitute a barrier preventing effective claims for compensation. The qualification involves an assessment of how the market in question would have evolved given there had been no infringement, which implies a comparison with a hypothetical situation and thus can never be made with complete accuracy. Quantifying harm is a very fact-intensive process and may require the application of complex economic models, which is often very costly and leads to difficulties in obtaining data necessary to substantiate the claims. The availability of data is also hindered by the information asymmetry, which is normal in relation to competition law litigation and makes it difficult for claimants to obtain the evidence necessary to prove the extent of the harm caused by the competition law infringement.
What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
Currently, most infringements have been established by the courts fall under the old rules on limitation. We therefore foresee more damage cases during the coming years, which fall under the new limitation rules.
However, one important first step for competition litigation in Sweden would be to see more successful case-wins for the Swedish Competition Authority, which over the past years has seen several defeats and a lower investigatory activity.
Following that it would be an important move forward if there would be a first broadly recognized successful damages case. This would probably require a general change of attitude in the Swedish business community to the effect that seeking damages is a viable option that will not damage important business relations going forward. Moreover, a first successful class action for antitrust damages could open up for more such cases, which currently is not generally perceived as an interesting option for Swedish companies or consumers suffering direct or indirect damages for undertakings’ breach of the competition rules.
Due to the recent trend of the Patent and Market Court’s judgments being annulled after an appeal before the Patent and Market Court of Appeal, in the favour of the defendant, we believe that companies on the defendant side will be more inclined to go through an appeal process.