The adoption of the EU Damages Directive (2014/104/EU), which introduced a level playing field for the private competition law enforcement regime among EU member states, has paved the way for private enforcement to gain more traction in the European Union, including in Slovenia.
Private enforcement can be triggered by an injured party (ie, an individual, a legal entity, an organisation or a public entity) claiming to have incurred damages as a result of a competition law infringement. An action for damages can be brought before the courts either as a standalone claim or following the adoption of an infringement decision by the European Commission, the Slovenian Competition Protection Agency or any other national competition authority.
The EU Damages Directive was transposed into Slovenian law with the Prevention of Restriction of Competition Act, which confers a right to claim compensation to anyone who has suffered damages arising out of competition law infringements. While private enforcement actions could already be brought before the implementation of the EU Damages Directive (based on the general rules governing the non-contractual liability regime under the Obligations Code), the Prevention of Restriction of Competition Act now sets out a robust set of rules to facilitate private enforcement actions.
The introduced changes:
- alleviate claimants' burden of proof;
- facilitate access to evidence; and
- provide for specific provisions applicable when determining the amount of damages resulting from competition law infringements.
Although the EU Damages Directive focused its efforts on removing obstacles to a more effective system of private antitrust litigation, injured parties are still less likely to seek a remedy through time-consuming and costly litigation where the individual harm suffered is of low value. In turn, this leaves many injured parties without compensation.
Collective dispute resolution as alternative to conventional litigation
The adoption of the Collective Actions Act has offered a solution to the aforementioned private enforcement gap and further facilitates private enforcement actions by allowing injured parties to group together to pursue collective redress.
In the realm of competition law infringements, regardless of whether the infringement procedure before the Competition Protection Agency or the European Commission was already pending or was initiated after the filing of the collective action, the Collective Actions Act allows for collective redress only in the form of follow-on claims building on the Competition Protection Agency's or the European Commission's final infringement decision. This alleviates claimants' burden of proof, since the infringement of competition rules (accounting for the harmful event as one out of four conditions for the existence of non-contractual liability) is already established.
Whatever the scenario, a collective redress requires the court's approval. The court renders the collective actions admissible provided, among other things, that the claimant – having legal standing – acts in its capacity as representative. In this sense, the collective action may be brought either by a public authority (ie, senior state attorney) or a private legal entity engaged in a non-profit activity aimed at pursuing the protection of rights allegedly infringed as long as it is an adequate and genuine representative of the injured parties' interests.
Under the Collective Actions Act, collective actions may operate both on an opt-in and opt-out basis; the court will determine which of these will be used in a particular procedure. While under the opt-out regime, parties belonging to a certain class or group automatically take part in the litigation and are bound by the court's judgment unless they expressively withdraw, a judgment rendered on an opt-in basis is binding only on those injured parties which have actively engaged in the litigation.
Multi-claimant disputes and litigation funding
In cases of collective redress, claimants can resort to litigation funding. Under the Collective Actions Act, third parties – seeking either profit or a non-profit aim – and the plaintiff's attorney are free to invest in litigation in exchange for a portion of the proceeds as long as the contingency fee arrangement is aligned with the limitations set out in the Collective Actions Act and the Attorneys Act, respectively.
The Collective Actions Act sets out a few limitations to such contingency fee arrangements, the most straightforward relating to attorney success fees. The attorney's share must not exceed 15% of the awarded amount (or 30% if the attorney undertakes to bear all of the costs in case of an unsuccessful litigation). A few additional limitations apply in collective redress schemes using the opt-out principle, such as the amount from which the share is calculated and the lower limit of the attorney's award.
On the other hand, no financial arrangement limitations are in place for third-party funding. However, to steer clear of criticism for lack of transparency, the claimants are under a procedural obligation to disclose the source of funding to the court. In revealing the existence of a funder, the court will approve the collective redress case to go further only if there is no conflict of interests and the third party has sufficient funds to repay the defendant's litigation costs should the collective action fail.
Alternative to litigation funding also available outside class action regime
In addition to litigation funding, which is still in its infancy in Slovenia, there is another mechanism helping claimants to navigate the obstacles associated with the ever-higher costs of litigation.
The concept of fiduciary assignment allows claimants which lack sufficient funds to assign their claims to a third party (ie, an assignee) for the sole purpose of collection, while retaining a right with regard to the assignee to claim the recovered proceeds. However, for such an arrangement to benefit both sides, the assignee will generally be willing to invest in litigation only in return for a fair share of the proceeds.
