Availability of civil claims
Scope for civil claims in Hungary
Any natural or legal person that qualifies as an “undertaking” (i.e., an economic enterprise) can be sued in the Hungarian civil courts for damages resulting from an infringement of Articles 101 and 102 TFEU and/or Chapters IV and V of the Hungarian Competition Act (“HCA”). Private enforcement actions can be brought pursuant to the general rules of civil procedure and the special rules contained in the HCA.
Private enforcement actions must be brought in the civil courts. There are no specialist courts or sections of courts to hear actions for damages on the basis of a breach of competition law. Depending on the value of the claim, cases can be heard either by the local courts or the regional courts (such as the Budapest-Capital Regional Court).
A prior finding of an infringement is not a precondition to bringing a claim for damages. However, the HCA requires that the court notifies the Hungarian competition authority, the Competition Office, if competition laws are to be applied in pending civil litigation. If the Competition Office informs the court in response to such a notice that it has launched an investigation in that particular case, the court must suspend its procedure until a final and binding decision has been made by the Competition Office. The decisions of the Competition Office are binding on civil courts insofar as the decision establishes the infringement.
Applicable limitation periods
In respect of damages claims based on an infringement of competition law, the limitation period runs for five years from the date on which the damage was incurred.
If the claimant is somehow prevented from enforcing his rights (for example, where the event causing him damage is kept secret so that he is not aware of the damage suffered), the limitation period is automatically extended and expires one year after the obstacle to enforcement has been removed. So, the limitation period will be extended for a secret cartel until such time as the victims become aware of the damage caused (or reasonably should have done so, for example when the case becomes public or an infringement decision is published).
Decisions of the local courts and the regional courts in Hungary are subject to appeal on the basis of fact and of law. Appeals against decisions of the local courts are heard by the regional courts, while appeals from the regional courts are heard by the Regional Courts of Appeal.
The Regional Courts of Appeal may refer a case back to the court of first instance if serious procedural errors are identified or if it considers that further evidence is required from the parties in order to address the case, the consideration of which would put a significant burden on the Regional Courts of Appeal. Otherwise, the Regional Courts of Appeal may reach a decision on the merits of the case.
The legal remedy available against final and binding judgments of the second instance courts is “extraordinary judicial review.” This is only available for appeals based on errors of law. Extraordinary judicial review cases are heard exclusively by the Curia (the supreme court of Hungary). Retrial is also possible in limited cases.
Availability of class actions for infringement of competition law and/or damages in Hungary
There are no class actions, as such, under Hungarian law. Certain types of collective action are available, some of which may result in an award of damages in competition law cases.
Firstly, two or more claimants may commence a joint action if:
i) the subject matter of the claim is a joint right or obligation that can only be judged in one procedure, or if the judgment would affect the joint claimants irrespective of whether one did not participate in the claim;
ii) the claimants’ claims are based on the same legal relationship; or
iii) the claimants’ claims have similar legal and factual bases and the same court has jurisdiction over all of the defendants.
Secondly, pursuant to Section 92 of the HCA, where an infringement falling within the competence of the Competition Office caused harm to a large number of consumers, it may bring a civil law claim against the undertaking on behalf of consumers. The condition of such claim is that an investigation has already been launched by the Competition Office regarding the infringement (the Competition Office may request the court to suspend litigation until the end of the investigation). The objective deadline for the claim is three years following the infringement. However, the duration of the investigation shall be disregarded. This action can be brought on behalf of an unidentified number of consumers, provided it is possible to establish their individual identities (i.e., they are a certifiable class). If the claim is successful, the court will require the defendant to comply with any order made, such as an award of damages, and will determine which consumers are entitled to enforce it. Such an action does not affect the right of consumers to commence proceedings against the defendant in their own right. To date, no such claims have been brought in relation to an infringement of competition law.
Finally, it is also possible for claimants to assign their damages claims to another entity, which will enforce them in its own name and can retain any damages recovered.
Conduct of proceedings and costs
Burden of proof
The claimant bears the burden of proving the infringement and, if damages are claimed, that this infringement caused loss. There is no formalized test for the standard of proof as such – the party bearing the burden of proof must discharge its burden of proof in a way that enables the court to reach a firm conviction on the claim. In respect of cartel cases, the burden of proving that an agreement falls within Article 101(3) TFEU exemption or the Hungarian equivalent, Section 17 of the HCA, is on the defendant.
Claimants seeking damages are required to prove, under the general rules of private law, the existence of an infringement, causation and loss. The claimant has to prove that it suffered loss as a result of the defendant’s conduct, i.e., that the loss would not have occurred in the absence of the infringement.
Where a prior decision of the Competition Office or the European Commission has already established an infringement of competition law, the court hearing the follow-on action(s) must accept the infringement as established. Thus, in a follow-on claim for damages, the claimant is only required to prove causation and loss.
Joint and several liability of cartel participants
Joint and several liability for competition law breaches exists as between those responsible for the breach. Thus, as cartels are collective infringements, members of the cartel are jointly and severally liable for damages caused. This means that a claimant may sue any and all members of the cartel for all damages caused by the infringement. Typically claimants would sue all members of the cartel in one lawsuit. If the claimant’s action is successful, the court would fix the amount of damages and confirm the joint and several liability of the defendants. Claimants can then collect the full amount of damages from any and all defendants.
“Contribution” is available among defendants. Each is liable for damages according to the proportion of its fault. If this cannot be established, the liability of the defendants is according to their involvement. If even this cannot be established, liability is shared equally among the defendants. There is no precedent as yet in the Hungarian courts as to how the issue of contribution might be approached in the context of a competition damages case.
Notwithstanding the above, the court may depart from the general rule of joint and several liability and oblige each defendant to pay damages in proportion to its contribution to the loss if: (i) the claimant contributed to the loss; or (ii) this is otherwise justified by the special circumstances of the case.
Where only one or some potential defendants are sued, the named defendant or defendants may request that other parties are joined to the case. If those parties accept their joinder to the lawsuit, they (as intervening parties) may support the position of the defendant or defendants who were originally parties to the lawsuit. However, the assessment of the legal relationship between the defendant or defendants who were originally parties to the lawsuit and the newly joined interveners shall not be subject to this very lawsuit. The parties who were requested to join the case may deny the joinder without explanation. Another scenario is when the defendant or defendants raise(s) in the lawsuit that further parties should be involved in the case as defendants. However, it is in the sole discretion of the claimant(s) whether to extend the claim also to these parties.
Notwithstanding the above, the HCA contains an important concession to parties who are granted immunity from fines by the Competition Office. Although they remain jointly and severally liable to pay damages resulting from an infringement, they may refuse to pay damages provided that the claimants are able to collect those damages from any other party to the infringement. Additionally, the HCA provides that the courts must suspend proceedings initiated against a successful immunity applicant until the decision of the Competition Office is final against all cartel members (i.e., until any legal remedies relating to the decision are exhausted). These rules have not been invoked yet.
The wording of the HCA suggests that the above benefits of leniency are only available to parties who received immunity from the Competition Office. However, on the basis of Community law, parties receiving immunity from the European Commission may be able to claim the same benefits. In any case, the concession granted by the HCA from joint and several liability is only possible if the claim is decided under Hungarian civil law, as the suspension obligation only applies to Hungarian courts.
Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privilege
There is no disclosure as such under Hungarian procedural law. However, a party may request that the court orders another party to produce any specific evidence it holds that is not already in the requesting party’s possession.
Private claimants may also request the court to obtain documents from the Competition Office if these are not accessible otherwise. Pursuant to the Act on Civil Procedure, the Competition Office cannot refuse to transfer documents to the court and not even leniency applications or settlement submissions are protected from transmission. Documents transmitted to the court are, however, not automatically disclosed to claimants. If a document contains business secrets, the court must seek permission from the holder of the secret before disclosing it. If the holder of the secret objects to the disclosure of its business secrets, the document (or the relevant part of the document) cannot be used as evidence. Although courts are generally free to determine under the applicable rules of the Civil Code whether a document contains business secrets, pursuant to a recent amendment to the HCA, courts have no discretion to assess the confidentiality of leniency applications and settlement submissions, which must be considered as business secrets due to a mandatory provision of the HCA. Such documents are therefore only disclosed to claimants with the permission of the party submitting it to the Competition Office.
As the first follow-on damages actions issued in Hungary are still pending final determination, and as no stand-alone actions have been brought to date, the above rules on disclosure have not yet been tested in the context of competition law litigation.
There is no pre-action disclosure under Hungarian procedural law.
Average length of time from issue of claim to judgment in Hungary
As the first follow-on damages actions brought in Hungary are still pending final determination, it is not possible to specify average duration to completion.
However, on average, it takes two to five years to obtain judgment at first instance on a general claim. The duration of the proceedings will depend on the complexity of the case. Competition cases can be expected to be similar.
A recent amendment to the Act on Civil Procedure obliges the courts to handle the case in an expedited manner if the value of the case exceeds HUF400 million (approx. EUR1.35 million). This amendment may speed up private enforcement litigations if the amount of the damage claim exceeds the abovementioned amount.
Average cost from issue of claim to judgment in Hungary
The fee charged to commence civil proceedings is 6% of the value of the claim, subject to a statutory maximum of HUF1.5 million (approx. EUR5,000).
The losing party will normally be required to pay the legal costs reasonably incurred by the successful party. Legal costs include costs reasonably incurred by the parties in connection with the dispute before proceedings were commenced or out of court, including costs relating to the production of evidence (e.g., experts’ fees) and the cost of representation (e.g., lawyers’ fees). Lawyers’ fees are not automatically awarded in full as the court may award a reduced amount in accordance with the statutory fee schedule. However, the Hungarian courts, in light of recent court practice, tend to award higher lawyers’ fees in relation to lawsuits between business entities.
Alternative methods of dispute resolution
There is no publicly available information concerning any arbitration procedure regarding private enforcement action in Hungary as yet. However, in theory, this route is available for competition law cases. Similarly, mediation may be involved at any stage through the agreement of all relevant parties.
Availability of damages and quantification
In civil proceedings based on a breach of Hungarian or EU competition law, damages may be awarded in accordance with the general rules of civil law. Damages are designed to restore the claimants to the position they would have been in if the breach had not been committed.
Claimants may seek to recover full damages, including interest. In principle, all pecuniary damage (actual damage, loss of profit and costs incurred in connection with reducing or diminishing the damage caused) and non-pecuniary damage suffered by the claimant are recoverable. Any fines imposed by the competition authorities are generally not taken into account when calculating the level of damages.
Private enforcement of domestic or EU competition law is not yet an established practice in Hungary and no award of damages has yet been made by the Hungarian courts. The appropriate method of quantifying damages is therefore uncertain. In general, damages are quantified by the court upon the motion of the claimant. Where quantification requires specialist economic expertise, the court may appoint experts to advise on the method of calculation and the exact amount of damages.
In order to reduce the burden associated with the quantification of damages, an amendment to the HCA introduced a rebuttable presumption that in cases involving hard-core cartels, the infringement will be assumed to result in an illegal price increase of 10%. As a result, it is likely that in practice a claimant will only need to prove causation and/or that the damage incurred exceeded the 10% level. It will then be up to the defendants to prove that either the amount of the damage was less than 10% or that the claimant did not suffer any damage at all (e.g., by invoking the passing-on defense).
The Hungarian courts would most likely consider the question of passing-on when assessing whether there is causation and/or damage. The passing-on defense should be successful, in particular, if the defendant is able to prove that the claimant’s profit margins remained the same during the existence of the cartel, or that the claimant’s profits remained stable or were growing as expected under normal circumstances.
Punitive and exemplary damages
Punitive or exemplary damages are not available in Hungary.
Availability of interim or final injunctions in respect of an alleged competition law infringement
Generally, two types of interim measures are available in Hungarian civil proceedings. The court may grant an interim injunction to maintain the status quo between the parties (e.g., to prevent further damage), or the court may freeze the assets of the defendant to safeguard the enforcement of a potential judgment.
Interim injunctions are available in courts pursuant to the provisions of the Hungarian Code of Civil Procedure. Claimants can obtain an interim injunction if: (i) it is necessary in order to prevent damage; (ii) it is necessary to end the infringing activity; or (iii) if the special circumstances of the claimant make it necessary and if the harm caused by the preliminary injunction does not exceed its benefits.
A decision on whether to order an interim injunction is at the sole discretion of the court. Interim injunctions have not yet been tested in private enforcement competition cases.
The Hungarian courts have the power to grant final remedies to protect the claimant against further loss. Courts may: (i) issue a cease-and-desist order to avoid further damage; (ii) order the defendant to take any action necessary to prevent further damage; and (iii) require the defendant to provide security for any future damages. The new Civil Code also expressly provides that, in case a dominant company refuses to conclude an agreement and thereby commits an abuse, the other party may request the courts to create the agreement.
What other types of relief might be available to claimants in Hungary?
As noted above, claimants may bring claims for outcomes other than the reward of damages. They may also ask the court to:
i) issue a cease-and-desist order to avoid further damage;
ii) order the defendant to take any action necessary to prevent further damage;
iii) provide security for any future damages; and
iv) create an agreement in case of an abusive refusal to conclude a contract by a dominant company.
Moreover, as any agreement infringing competition law is null and void, claimants may also ask the courts to apply the legal consequences of an invalid contract and to restore the former status quo, or, if this is impossible, to declare the contract invalid until the final decision of the court.
The first follow-on damages actions in Hungary are still pending final determination. The outcome of these cases will determine whether private damages claims may become common in the future. The Competition Office remains committed to facilitating private competition litigation. If necessary, it may initiate further legislative changes to ensure victims can effectively exercise their right to claim damages.