Is it true that more eyes see more? - Focusing on collective redress for competition law violations

For the VIDEO PODCAST version of our blog, click HERE!

How many people feel vulnerable or powerless in the face of dominant market players? How can we give more chances to consumers and businesses who have been exposed to unfair market behavior, cartels or other restrictive forms of competition? How can we ensure that victims with less potential remain in focus by ensuring that they can effectively seek legal protection to pursue their claims arising from competition law infringements? The judgment of the Court of Justice of the European Union in Case C-253/23, which puts collective redress at the forefront, can serve as a guide to awareness for such pointful debates.

Competition law basics at crossroads: changing rules is changing the game?

The law of the EU, including competition law ensures that those who have been harmed by unlawful restrictions of competition, cartels or unfair market practices can join forces to press their rights. With regard to local law the Competition Act, known as the Tpvt., serves as solid basis for bringing an action. The Act sets out in detail the scope of the competition law prohibitions, the violations which may make an entity liable to the injured parties. Both Hungarian and EU legislation aim to provide for an adequate procedural remedy against breaches of competition rules, and the Competition Act explicitly addresses the possibility of a civil action in case of a breach of the prohibited conduct. Unfortunately, in this respect, smaller entities cannot always benefit of the same financial and professional resources to pursue their claims as large companies. Perhaps above all, it takes determination for these smaller companies to embark on litigation on their own to battle against the consequences of unfair market conduct or cartels. The possibility of collective redress is a lifeline to this challenge, since the legislative objective is to ensure that principal rules such as the prohibitions in competition law shall be enforceable by judicial means in the event of infringement. This is also referred to in the Hungarian Constitution itself, which raises the fundamental right of the possibility to file civil lawsuit against any unlawful act to a constitutional level.

With the judgment of 28^th of January 2025 in Case C-253/23, the Court of Justice of the European Union strengthens the right to collective redress. The initiative of the case has  German background, but it will certainly have an impact on Hungarian competition law enforcement, as the CJEU's judgments are precedent-setting. The judgment focuses on the fact that EU Member States, including Hungary, must provide a secure and warranted legal environment for parties harmed by competition law infringements. The ruling underlines that collective redress is a valid alternative for effective enforcement. As already mentioned the rulings of the Court of Justice of the European Union are precedent-setting, so the provisions laid down by the CJEU can not be ignored in domestic proceedings.

Co-litigants for procedural efficiency - the winning card in collective competition disputes

Part Six of the Competition Act refers to the possibility of legal proceedings in case of breaches of the competition rules mentioned above. Also, the Tpvt. details the scope for affected parties how to bring an action in the field of competition law - for example, to request establishment of infringement in relation to cartels or to claim damages in accordance with the civil law provisions. To justify whether multiple claimant can file motions in front of the courts at the same time together, the Code of Civil Procedure (Pp.) should be examined. We recall the legal institution called ”co-litigators for procedural efficiency” in the Pp., which allows several parties to sue together if the claims in question - including such in the field of competition law - have a similar factual and legal basis. In other words, it can be said that the relevant provisions of the Pp., which are in line with the CJEU judgment under examination, already give the harmed parties the right to arm themselves by means of this legal instrument for joint enforcement of competition law claims.

The tables have turned, but how much will the judgment affect the future?

As we mentioned the decisions of the CJEU, including the current C-253/23 judgment, are precedent-setting, consequently it will impact Hungarian procedural law when considering the content of the decision. Primarily prohibitions contained in Chapter II of the Competition Act carry more weight, as it is facilitating  harmed entities  to take collective action in the event of a breach of these prohibitions. This reduces the willingness of market players to commit infringements by increasing the threat of litigation. Incidentally the financial prerequisits become much more favorable and administrative burdens are reduced, hence there will be no individual claims filed with the court when several entities join forces. At last but not the least we expect  it can improve the efficiency of the GVH, the national competition authority, by allowing the detection of not one but several infringements in a shorter time.

Pros and cons: a jackpot or too much risk?

In my opinion, a closer look at the pros and cons of collective redress will also have an impact on the development of case law. It can be said that it is difficult for smaller companies to detect competition law infringements due to the frequent lack of sufficient legal expertise. On the side of law enforcement, the disadvantage is that the development of a common platform of multiple entities can be time-consuming and fraught with trade-offs, but it may prove extremely cost-effective and the power and psychological impact of collective action is undeniable. From a litigation point of view, it can also reduce the workload of the courts, as opposed to the administrative burden caused by the many lawsuits brought individually. Another advantage is that, as more eyes see more, the parties harmed can examine the legal problem from more angles and thus assert their rights effectively and synergistically.

Question arises, however, whether, in the future, the institution of co-litigating parties for procedural efficiency or another legal instrument will be the effective procedural solution for collective redress in competition law at the domestic level following the CJEU's judgment in Case C-253/23.

Author: Ádám Poncsák

S O U R C E S:

Photos:

-Unsplash

Legal sources:

-Act LVII of 1996 - on the Prohibition of Unfair Trading Practices and Unfair Competition (Tpvt.)

-Fundamental Law of Hungary

-Act CXXX of 2016 - on the Code of Civil Procedure (Pp.)

- judgment of the CJEU in Case C-253/23

-https://curia.europa.eu/jcms/upload/docs/application/pdf/2025-01/cp250008hu.pdf