Commentary PaRR (Policy & Regulatory Report) – by Nicholas Hirst and Martha Ivanovas in Brussels

Although cartel claims are a growing market for litigation funders, their complexity in respect of valuation, the absence of class actions and the high costs of such cases, limits their ability to attract funds in the UK, sector specialists told PaRR.

This led Calunius Capital, a leading UK litigation funder, to focus its antitrust investments outside the UK, concluding funding agreements with Cartel Damages Claims (CDC), a Belgian investment vehicle that buys up victims’ claims, Leslie Perrin, Chairman of Calunius, told PaRR.

Matthew Amey, director at TheJudge, a leading UK broker for litigation funding, estimated that only 5% of cases of over GBP 500,000 currently brokered by TheJudge related to antitrust claims.

In June, the European Commission (EC) presented a legislative proposal on private antitrust damages actions to facilitate damages claims from victims of EU antitrust law infringements, such as cartels and dominance abuses. In only 25% of EC’s competition cases in recent years did victims seek compensation, according to the EC.

The EC also aims to encourage actions following from approximately 100 national competition authorities’ decisions, as reported by PaRR.

Funding to bring these litigation claims can come from third parties. Litigation funders provide finance for the litigant’s case and bear the litigation risk. Funders cover the fees if the “loser pays” principle applies in exchange for a share of the proceeds if the claim is successful.

Usually a discretionary amount, the share can add up to 33% of the proceeds, according to European consumer organisation BEUC.

‘Cherry on the cake’

No one really knows how big litigation funding is, said Perrin, who is also Chairman of the Association of Litigation Funders of England and Wales (ALF), whose members will observe the new Code of Conduct of Litigation Funders. There are several other investment firms that provide litigation funds that are not members of the ALF, including occasional players like hedge funds as well as known specialist overseas funders such as Claims Funding International or Omni Bridgeway.

Ross Clark, Chief Investment Officer UK of Burford Capital, a US litigation funder that purchased a UK legal insurance firm 18 months ago, estimated that the global litigation funding market as a whole represented less than EUR 1bn, of which competition cases would only be a “small part”.

Competition claims can give rise to high damages because of the amount of time over which the victim was harmed, said Amey. This is why they form an important segment of a funder’s portfolio. However, a healthy portfolio will spread the funder’s risk across several areas of law that can also accommodate returns for funders, so they need to select their cases carefully.

Cartel claims are the “cherry on the cake in some ways”, said Amey. These are big cases where returns can be good but they can be very complex and take time to conclude, he noted. It is the time these cases take which can present the biggest challenge for funders, he added. Despite this, there is a wide pool of funders enthusiastic about this area.

Amey estimated that 5% of the cases brokered by TheJudge requiring EUR 500,000 or more funding, related to antitrust claims.

This represented an increase of 50% YoY, though bearing in mind the industry is fairly nascent, he added.


Clark agreed that there are potentially a large number of antitrust claims to be litigated. But he also cited a number of obstacles.

It is not easy to find lawyers who are able to act and have sufficient resources to do such claims, he explained. These cases can also take a very long time once all the appeals and challenges have been heard.

In addition, book-building, or gathering together a group of claimants, can be difficult and very time-consuming, given that antitrust class actions are generally not permitted in the UK.

Perrin also cites the “costs and complexity” of London proceedings as a disincentive to bring a cartel claim in London. In London, defendants may employ a “scorched earth policy” by stalling proceedings and racking up expenses, he continued.

Beyond the UK

But “the ice is thawing on the private actions glacier”, said Perrin. “All over Europe there are signs and judgments indicating cartelists are starting to reach into their pockets,” he added, referring to recent rulings in Germany, Finland and the Netherlands.

Pursuing claims under civil law allows us to better manage our risks, said Perrin.

Certain EU jurisdictions, including Germany and the Netherlands, allow third parties to take ownership of assigned claims, while legal costs are also often far lower than in the UK.

In October 2012, Calunius made “strategic investments” into CDC, which purchases cartel claims from victims and as a result can bring a group of claims in its own name. It is currently pursuing claims following on from EC fines against cartels in the hydrogen peroxide, sodium chlorate and paraffin wax sectors.

Clark agreed that it may be easier to bring cartel claims outside the UK at the moment because of the possibility for funders to own the claim.

But litigation funders may now also have a greater role to play in competition claims filed in London following the UK Jackson Reforms, said Clark.

The Jackson Reforms prevent judges from making a defendant that loses a case bear the claimants’ after-the-event insurance costs and claimant lawyers’ success fees.

In addition, there are certainly a lot more lawyers looking at these cases than two to three years ago, said Clark. He said that in the past it could be difficult to find able lawyers, since the big firms tend to only represent defendants.

Lawyers are increasingly keeping an eye on EC cartel decisions and exploring the possibility of funding opportunities for clients, said Maddi Azpiroz, founder of ClaimTrading, another London broker for litigation funds.

Our impression is that litigation funders will focus more and more on the sector, but these are still early days, said Azpiroz.