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JONES DAY TALKS  Antitrust Litigation in France

JONES DAY TALKS®: Private Antitrust Litigation in France

Jones Day’s series on private enforcement actions relating to antitrust matters in Europe continues with a focus on recent developments in France. Partners Eric Barbier de La Serre and Ozan Akyurek discuss how proceedings typically develop in private enforcement matters, access to evidence under French law, class actions, and why French courts are receptive to these actions.

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Read the full transcript below:

 

Dave Dalton:

 

If you've been listening to these programs you know that private antitrust litigation has continued to expand across Europe. The fifth in our series of podcasts on the topic shifts our focus today to the current circumstances in France. Partners Eric Barbier de La Serre and Ozan Akyurek are here to bring us up to date. I'm Dave Dalton, you're listening to JONES DAY TALKS®.

 

Dave Dalton:

 

Eric Barbier de La Serre has 20 years experience in European and French competition law. He has handled numerous antitrust and state aid cases involving the telecommunications, electronic components, media, financial services, and energy sectors. He has consistently been recognized for his work by chambers, the legal 500, and the international who's who of competition lawyers and economists.

 

Dave Dalton:

 

Practicing in the area of commercial litigation and international arbitration Ozan Akyurek assists clients on all issues relating to product liability, industrial risks, business torts anti-corruption on white collar crime. He has authored numerous articles on litigation and regulatory matters such as product liability and aviation laws. Those articles have appeared in numerous French economic and legal publications. Eric, Ozan thanks for being here today.

 

Eric Barbier de La Serre:

 

Thanks Dave.

 

Ozan Akyurek:

 

You're welcome Dave.

 

Dave Dalton:

 

This is going to be a very interesting program. This is the fifth in our series of podcasts about private antitrust litigation and enforcement in Europe. We did a general overview. We did a podcast on the landscape in Germany, Italy, and the Netherlands. Today, we're going to focus on France and find out what's going on there. So as a segue to get us started, Eric, why don't you talk about the general landscape of private enforcement in France? How are things as we sit here today?

 

Eric Barbier de La Serre:

 

Thanks Dave. One can fairly say that fraud enforcement has really taken off in France because as a whole, you can really see there's an increasing number of cases. Although of course that's the case in the other jurisdictions, but many of them do remain confidential due to the existence of private settlements. But certainly in the past, they used to be a kind of reluctance among victims to sue offender and sometimes this was because they had long established commercial relationships. It might be difficult for a buyer to sue a supplier, but clearly this is changing and there is less cultural reluctance among companies to sue commercial partners. I think this is also due to the fact that there is now increasing legal certainty on many legal issues, which before were a bit unclear and therefore it's easier for victims to sue companies. Now, what is also interesting is that the private enforcement cases you see are not necessarily the ones you would expect to see, because the common wisdom is that normally most private enforcement cases are follow-on cases.

 

Eric Barbier de La Serre:

 

That is, cases that are, as you know, started after a competition authority has adopted a decision and this is the signature does such as opposed to what is called standalone actions, which are cases which have started without a decision, but in France, at least the reality is a bit more complex than this. Because if you look at the cases that are public, in fact, you can see that there's quite a significant number of standard on actions and this is probably something that is quite specific to France, because if you have a look at the report that the European commission issued on the implementation of the private enforcement directive, you can see that in the youth standard actions accounts for basically 2% of the total of actions, and that's probably more important in France. The second reason, which makes it a bit specific in France is that you would normally believe that most cases would be about causal cases, but in France, once again, this is a bit more complex because you can sit number of actions, which concern abuse of dominance infringements.

 

Eric Barbier de La Serre:

 

And this is quite remarkable because these are cases where it's not necessarily easy to prove that there's a damage because of damage that will be presumed. And finally, there's a third element, which is quite interesting and specific to France is that quite commonly, you would believe that the actions would be mostly before civil courts. But in fact, what you can see is that they are a number of actions before administrative courts. And this is because administrative courts are competent in case of an action, which is related to a contract with the public authorities. So typically when there's a bid rigging case that involves a public authority, this ends up at the end before the public court. So I think what is interesting is that the in France [00:04:30] enforcement has clearly developed, but in fact, also in the directions, which were not necessarily anticipated.

 

Dave Dalton:

 

Okay, so clearly there's been an influx in cases, as we've talked about these matters in different jurisdictions. It's become apparent to us that access to evidence is so important when it comes to private enforcement and there are differences between common law and civil law countries. Erik, how does access to evidence work under current French law?

 

Eric Barbier de La Serre:

 

Well, clearly in France, the EU directive on private enforcement has been implanted for rather cautiously. That it's not a revolution. The principle remains in France that each party must produce the evidence that is supposed to prove its case. But clearly also, because this is a new law obligation. Now French law includes provisions that are specific to private enforcement and that give judges the right to order, the production of evidence, which are in the hands of the other parties. And this is of course important, but the rent is that this is not a revolution because French judges has already had this power to order the production of evidence, even before the directive itself. The difference that you can see is that now this is more explicitly acknowledged in the [00:05:48] enforcement and therefore, certainly judges will feel more pressure to other these measures in private enforcement cases, but on the other, there's a clearly mates in the directive and in French, which is that the measures that are ordered must remain proportionate and therefore judges will still have a lot of leeway to craft the measures that they think are necessary. So the big question is going to be the practical use that they will make of these new provisions and on this it's a bit early to know what they will do with that, but that's clearly something we'll need to monitor.

 

Dave Dalton:

 

Yeah, clearly, clearly, well, let's go to Ozan and pick up on a point. You started to allude to talk about cultural norms and France Ozan and how they relate to evidence and the new provisions that Eric mentioned under French law.

 

Ozan Akyurek:

 

Thanks Dave. Well historically under French law, there is no equivalent or comparable process to the discovery procedure found in the U.S., In our French code of civil procedure we have a number of provisions relating to evidence production. Eric mentioned a couple of them, but for instance, article nine of our French codes provides that each party must prove the facts necessary for the success of its claim. Article 10 provides that a court may order any measures of inquiry deems necessary to enable it, to decide on the case. And under article 11, a party may ask the court to order other parties to the proceedings or even a third party to submit any kind of document necessary to prove the facts alleged unless of course, those third parties have a legitimate impediment. So this is what we have in our code regarding pre-proceedings i.e Before court proceedings are instituted.

 

Ozan Akyurek:

 

Again, there is no discovery procdure here article 145 of our code of civil procedure only allows the court to order preparatory inquiries, to preserve evidence of the facts on which a claim is based for instance, or to establish the existence of such editing. So this limited framework would, to me explain that the new provisions of the directive were met with some level of defiance. If I may say we were a bit cautious in transposing, these provisions in our commercial code, because to be honest, those provisions are not really new and should not be understood to call into question or existing and well-established core practice. So I would tend to think that the fears attached to the directive were perhaps unwarranted because the directive does set a minimum requirements, which member States have to meet with respect to disclosure of evidence. But again, national courts will have to assess those disclosure requests against one reason justification to be proportionality principle and lastly, the legislation regarding trade secrets. So to sum up why there is a newly open possibility for parties to request production of categories of documents. It's very strictly regulated by courts in particular French courts and it does not in any way imply that there is a right to us style discovery.

 

Dave Dalton:

 

Yeah. I was going to swerve into that question. I was going to ask, will this mirror kind of what happens in the United States, but you're saying that's not likely the case.

 

Ozan Akyurek:

 

Absolutely.

 

Dave Dalton:

 

Ozan let's stay with you for a second. Let's talk about class actions and I know that's a relatively recent phenomenon in France. First of all, do you see many of these and assuming you do or have some experience, how do they work? And what's the role they play in private antitrust enforcement in France?

 

Ozan Akyurek:

 

That's a very good question. Thank you for asking it. You're right. Individual actions can be very cost prohibitive, and especially as compared to the minimal damage suffered by plaintiffs in most cases, and therefore class actions may appear to be appropriate way for private enforcement actions. You refer to the French class actions and you're right. They have been introduced fairly recently, at least compared to the U.S. Our law on class action entered into force in 2014 and does include competition actions in its scope and is now codified in our consumer code. And there are a couple of requirements to meet if one is willing to bring a class action. First of all, the anti-competitive behavior has already been sanctioned by a decision of a French competition authority or the European commission i.e. follow on actions as opposed to stand alone actions.

 

Ozan Akyurek:

 

And the second requirement is that victims are consumers. So class actions can only be brought by consumers association by certified nationally consumers association, which will represent the victims. And then the whole process would follow pre-steps. During the first stage, the association must present to the judge, a few individual cases on the basis of which the court will render its judgment as to the liability of the defendant and then the court will define the group of victims, rule on the extent of damages, and sets the time periods and modalities to our team. If your team period is the second stage of the court proceedings, and it's upon the representative consumer association to identify and seek out potential claimants, as opposed to the opt-out system that you have in the U.S for instance, and the third and final stage of these court does consisting the compensation of the victims by the defendants and parties, of course, may revert to the court to adjudicate any dispute related to the compensation phase.

 

Ozan Akyurek:

 

To answer your question, I have to admit that the low introducing class-action has not been very successful, at least in regards to competition litigation. I have not been able to identify any private enforcement class action so far. And this is partly due to the fact that these actions are restricted to consumers association of which we are a few, and which are not necessarily keen on taking on private enforcement action. Another noteworthy factor is probably that whereas ,class action or limited to damage suffered by consumers, private enforcement actions are actually almost exclusively initiated by businesses. It's therefore quite puzzling to see that businesses are barred from bringing class actions. One last point is about the opt-in system, which under French law has proven to be ineffective, especially given the fact that class actions are limited to consumers. For example, in one of the cartel cases, which was initiated in the early two thousands, so before even the concept of class action was introducing friends, an action was brought by a consumer association cleaning between 1.2 billion and 1.6 billion euros of damages suffered by 20 million consumers. And of those 20 million consumers via association only managed to obtain 12,000 mandates, which is only about 0.06% of the victims. So again, broadly speaking, the French class action mechanism has not had much of an impact on private enforcement practice as of yet.

 

Dave Dalton:

 

Okay. So if we can back up and sec, and I must say, I want to make sure our listeners understand I'm not familiar with the concept of consumer association, or perhaps they call it something different here in the United States. But when you refer to a consumer association, what kind of group is that Ozan?

 

Ozan Akyurek:

 

Well, it's basically a private organization, which is in charge of defending the consumer's interests and those associations have to be certified at the national level in order to be entitled to bring class actions.

 

Dave Dalton:

 

Okay. Makes sense.I'm familiar conceptually I know what they are again, that term was new to me. Okay let's stay with you Ozan for a second and talk about how proceedings unfold in a private enforcement case. Like the ones we've been talking about today.

 

Ozan Akyurek:

 

Sure. Well, it's fairly simple for private enforcement litigation and, unless the dispute involves a public party, actions must be brought before one of the 16 designated first instance civil or commercial courts. And as of his actions frequently in involve B2B disputes, most are brought before commercial courts and especially the Paris commercial court and the Paris court of appeal has exclusive jurisdiction to hear appeals against private enforcement judgements for all first instance courts in France. And as far as tending is concerned, anti-competitive behavior may harm different actors, such as competitors direct and then direct purchaser, including consumers. So in France, in order to have standing to sue a plaintiff must have a personal existing, and what we call a real interest effected by the defendant's conduct. But unlike other jurisdiction like Germany, there is no special requirement that applies to competition cases. And regarding of the applicable law, the damages direct to which has been transposed and codify in our commercial code applies from December 2014 as to the procedural aspects and from March 2017, as to the substantive aspect.

 

Dave Dalton:

 

Let's go back to Eric for a second. Eric, everybody wonders how long? The parties to a case they go, okay, how long is this going to take to resolve itself? I have a feeling these things aren't resolved quickly. Am I correct? How long does the case typically take Eric?

 

Eric Barbier de La Serre:

 

You are correct Dave. And I'm thinking there's no magic number, of course, but clearly private enforcement cases are normally quite long and one of the main reasons for that first is that if this is a follow on case for an action, that is an action after, but decision of a competition authority, well, claimants may find it necessary to wait for the decision to be final itself because the decision may be appealed and therefore the appeal against the decision may delay the action.

 

Eric Barbier de La Serre:

 

There are limitations to that and for instance, if the party appeals on the amount of the fine, normally this cannot delay the finding of the infringement being established, definitely, but there's also a second limitation to adopt, which is that in France, if a catelist appeals, the decision finding, the infringement, and it loses before the Paris court of appeal, which is the reviewing court, it can still appeal to the French Supreme courts. But at that stage, the infringement will be considered to be final and to be established.

 

Eric Barbier de La Serre:

 

So that makes it a bit quicker, but clearly a claimant may to wait some time before it can start the action. And then even once the action is started well, these cases are not yet standard cases, clearly not much easier because there's an increasing number of legal issues, which is clarified and has been thanks to the EU directive in particular. But there are still some legal complex questions, for instance, evidentiary rules on the passing on defense, which I think from our previous podcast remain quite complex. And also that's probably the main problem gear its claimants. It's the assessment of damage because even if you have proved that there's a fault, that there's a damage, and that there's a caused a little link between the two. It might still be quite difficult to quantify the amount of the damage. And that's why you may need expert evidence and that may take a lot of time.

 

Dave Dalton:

 

Sure. I can only imagine how this could drag out a little bit. Let's go back to Ozan in any kind of dispute like this. There's always a chance of a settlement and that can have an impact on how long it takes to resolve an issue. Ozan, talk about how a settlement might work if there's a private enforcement action brought.

 

Ozan Akyurek:

 

Sure. Well the directive, so to fully encourage consensual dispute resolution and disrespect, the U.S is clearly leading the pack as settlements make up close to 90% of the private antitrust dispute resolution. So of course, access to out of court settlement is only as effective as court's actions are victims of antitrust behaviors only have a bargaining power, if antitrust offenders know that these victims could seek redress through an efficient litigation mechanism. So this may sound a bit paradoxical, but by strengthening judicial private enforcement mechanism will actually increase the number of disputes that might end by settlement in particular or the fret of plaintiffs having access to the European commission or the competition authorities fine may give defendants a push to try to settle out of court. So for the same reason, in terms of timing, settlements would tend to happen once a case has been brought before the court. And in particular, after the court appointed experts, assessment on the damage. That's what I can say on that question.

 

Dave Dalton:

 

See, let's talk about jurisdictions. There's some evidence out there that some jurisdictions try to attract private enforcement cases. What are the French courts think about this? Do they have an appetite for these types of cases? I'd love to hear from both of you on this let's go to Eric first. Are French courts, actively soliciting cases like this?

 

Eric Barbier de La Serre:

 

Yes, that's key the base that they've shown much more appetite in the recent years. You can see for instance, that they are French judges who participate in conferences to actively promote French courts and the ability to deal with what is in fact, a complex case. So yes, there's an increasing appetite from French courts to get these cases

 

Dave Dalton:

 

And Ozan you concur. Is that what you see happening with the French courts?

 

Ozan Akyurek:

 

Yes, and I like to add that in terms of attracting private enforcement cases, it seems that our national courts have opted for what I would call ultra specialization rather than the sheer quantity.

 

Ozan Akyurek:

 

As I mentioned before, a 16 lower level courts are competent to hear private enforcement cases on the athletic level. There are four chambers at the parish court of appeal dealing with competition cases, but only one of them here is private enforcement cases, which is chamber five four, which is composed of judges who are highly specialized on this specific topic. The good thing about that is that it doesn't ensure uniformity in caseload and also intend to increase foreseeability for litigants. And the court was of course, very much involved in the implementation of the directive and regularly publishes and organizes seminars to reinforce potential litigants. So this is one thing.

 

Ozan Akyurek:

 

And the second thing I should, I should perhaps add, which is interesting, and which also has happened in other EU countries is the creation in 2018 of the international chamber within the Paris court of appeal, which also tend to contribute to the attractiveness of the French jurisdiction in the sense that it allows parties to argue and submit evidence in English. And also they can adopt a common-law style procedure with oral testimony and cross examination. So this feature combined with the assurance of being heard by judges, we extensive expertise on competition matters may just make friends as the ideal jurisdiction for private enforcement.

 

Dave Dalton:

 

Very interesting. I must say I wasn't necessarily expecting to hear that based on other things I know about the subject matter. So that's interesting information and revealing to me, we talked a little bit or alluded to damages earlier in this conversation, but we didn't drill down or examine that too much. Ozan talk about how damages are assessed or applied in these types of cases.

 

Ozan Akyurek:

 

Sure. Well, it's fairly simple. Our judges are legal professionals, so they're not by definition financial experts. So whenever they have to deal with figures and in particular with complex figures and complex financial claim, they would appoint an expert which we call a court appointed expert bearing in mind that the parties are also allowed to request the court to designate a financial expert. When it comes to assessing the damages, the plaintiff has suffered. And basically the court appointed expert will ask the bodies to meet up. We'll set up a number of expertise meetings where they will discuss the damages suffered by the plaintiff. Each party will, of course be allowed to send documents to the expert, will be allowed to challenge the approach taken by the expert in assessing the damage.

 

Ozan Akyurek:

 

And at the end of the day, the expert will draft a report. He will first draft what we call a draft report, which will be shared with the parties. And then the parties will be entitled to make any comments on that. And upon the reception of those comments, the expert will find his final report, a copy of which will be sent to the parties, but also to the court. And then the court proceedings will resume again. The parties will have the possibility to challenge the expert report if they want to and the court, which is by the way, not bound by the expert report, wIll take the report as an additional element. And in most cases, we'll take it into account in the final judgment, so I can even say that in 90 or 95 percent of the cases the court will follow the findings of a court appointed expert.

 

Dave Dalton:

 

I had one more note, one more mayor we wanted to cover in this. My sense is these sorts of proceedings aren't cheap and are not inexpensive propositions for the parties involved. Eric, could you talk a bit about what kinds of fees or costs might be involved with this sort of action?

 

Eric Barbier de La Serre:

 

Yeah, of course and the fees would very much depend on the efforts that the parties would put into the evidence they have to show. And in particular experts, as you can imagine, are not cheap. The rule is that in France, you, you may be reimbursed if you're the winning party for part of your own fees and fact, but this is generally not something that covers the amount of your fees. So that means that in practice, this may still be quite an expensive type of action for claimants. And that's why some parties may think of litigation funding in particular to try and support the actions when they are payments.

 

Dave Dalton:

 

I see. Very good. All right. Hey, this has been very informative Eric, Ozan we will leave it right there. Great information today. Thank you so much and as I mentioned earlier, this is part of an ongoing series about private antitrust enforcement and litigation across Europe, but as things develop in France or any other jurisdiction, if you've got updates, if there's something else, our audience should know, we'll revisit this again later this year, if you're good for that. Alrighty. Hey, enjoyed talking to you both.

 

Ozan Akyurek:

 

Thanks Dave.

 

Dave Dalton:

 

Be sure to listen to the previous podcast in this series, which focused on Italy, the Netherlands, Germany, and also included a big picture overview of private litigation and enforcement across Europe. The series will continue next month and we'll finish in mid 2021 with a cross jurisdiction round table so please watch for that. For complete biographies and contact information for Eric and Ozan visit Jones, state.com. And while you're there, visit our insights page for more podcasts, videos, publications, newsletters, and other helpful information. Subscribe to Jones day talks at Apple podcast and wherever else you find quality podcasts programming. Thanks as always for listening. I'm Dave Dalton. We'll talk to you next time.

 

Speaker 4:

 

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