SCC Spotlight Talk: Sabrina Frank

In this SCC Spotlight Talk we meet with Sabrina Frank, Inhouse-Counsel Antitrust and Litigation at Axel Springer SE, who guides us through the various aspects of arbitrating antitrust disputes.

What are some of the typical antitrust disputes that can arise?

Antitrust law aims to protect competition from cartels and abuses by dominant market players. It also includes proactive reviews of mergers to prevent competition distortions. Traditionally, most antitrust disputes involved cartel damages experienced by competitors or customers, primarily through price fixing and market sharing. For example, damage claims against truck OEMs, involving both Volvo and Scania, are typical cases. However, with the rise of digital business models, we are now seeing more disputes centered on the prohibition of abusing a dominant market position.

Is arbitration of antitrust matters ‘a thing’?

At first sight, antitrust law and arbitration might appear incompatible. Antitrust law, which aims to protect competition for its positive economic and socio-political effects, is an integral part of public policy. On the contrary, arbitration, particularly in commercial contexts, is created for the private interests of the parties involved and shaped through their autonomy. Nevertheless, a growing body of case law underscores the relevance and intersection of these two disciplines.

The Swedish Arbitration Act explicitly allows arbitrators to decide on the civil law effects of competition law between parties, validating the role of arbitration in antitrust disputes.

Why do we not see more antitrust arbitration proceedings?

It might be just the advantage of confidentiality that prevents us from seeing them. I have participated in contractual disputes with antitrust issues that were resolved through arbitration. But admittedly, there are a few hurdles. For example, antitrust claims are based on tort law. Even when the parties have included arbitration clauses in their contracts, such clauses may be too narrow to capture actual antitrust claims. Courts have taken the view that, even if arbitration clauses extend to disputes ‘in connection with’ – and not only ‘arising from’ – a contract, antitrust law-based claims are only to be decided by an arbitral tribunal if they are explicitly mentioned in the arbitration clause or if the agreement otherwise includes ‘clear indications’ of the parties’ intention to subject them to the arbitral tribunal’s jurisdiction. This limits the instances in which arbitral tribunals deal with genuine antitrust matters. In addition, to balance public policy considerations, courts, at least in Europe, have been claiming the right to a full review of antitrust matters in arbitration awards unrestricted by the prohibition of a revision au fond.

In parallel, the EU made court proceedings in antitrust matters more effective through the enactment of the Cartel Damages Directive. I think that this contributed to making state courts the first port of call for cartel damages claims. But even this Directive, in its preamble, explicitly encourages litigants to consider arbitration as a viable option to resolve disputes and reduce uncertainty for both parties.

In addition, in many antitrust cases, there are regulators at the center of the action. If a disadvantaged party’s main goal is to end a violation of the law, it may rely on the regulator’s power to investigate, fine and discipline the other party. However, regulators seem to have become overwhelmed by the number and complexity of antitrust proceedings that have surfaced more recently. As they need to prioritize and their investigations take more and more time, they, like for example the president of the German Federal Cartel Office, have started to call for more private action. I believe that this development will lead to more cases both in state courts and arbitrations.

Given the limits on arbitrating antitrust disputes, is this increase wishful thinking?

Not at all. Antitrust considerations can be integral to broader disputes handled through arbitration. For example, parties may argue about the scope and enforceability of exclusivity clauses in distribution or licensing agreements or of non-compete clauses in joint venture contexts. These issues can only be resolved by taking into account competition law.

In my view, also for genuine antitrust matters, the benefits of dispute resolution through arbitration should not be dismissed, even if arbitration awards in antitrust matters may be subject to a subsequent judicial review. Antitrust jurisprudence is not an unpredictable black box; it is backed by a vast body of case law developed over decades and detailed regulatory guidelines and instructions for the proper implementation of the law. Antitrust lawyers routinely consult with authorities in well-established formal as well as informal consultation procedures. There is no reason why consultation should not occur within the context of arbitration proceedings.

Arbitration proceedings are increasingly recognized as effective tools for enforcing antitrust rules in specific circumstances. For instance, when antitrust authorities negotiate commitments with parties in merger notifications to mitigate anti-competitive effects, they include arbitration mechanisms to the benefit of the parties’ business partners as part of behavioural remedies. A notable example is the highly controversial acquisition of the Italian pay-TV broadcaster Telepiù by Murdoch’s News Corp, which was approved with behavioural commitments subject to arbitration in case of their violation.

More recently, in a case that has been ongoing for years in France regarding the remuneration of press publishers for displaying extracts of their articles, photos, and videos on search results pages and in news services, Google agreed to negotiate payment in a transparent, objective, and non-discriminatory manner. If no agreement can be reached, the matter will be referred to an arbitration procedure. The French Competition Authority accepted these commitments and, thereby, acknowledged the benefits of arbitration. In other countries, similar arbitration mechanisms are even enshrined in the law: For example, in Germany, the act on copyright collecting societies foresees arbitration options to clarify remuneration issues, and in Australia, the News Media and Digital Platforms Mandatory Bargaining Code provides for compulsory final offer arbitration. With the rise of generative AI which also heavily relies on third-party content, I expect such remuneration setting arbitration mechanisms to gain even more importance.

Are there any other considerations you would raise with antitrust lawyers?

Other forms of alternative dispute resolution, such as mediation or SCC Express, which do not result in a binding and enforceable award and thus do not replace court proceedings, do not face these same challenges as arbitration. As long as these ADR measures are not used for collusive purposes, such as illegal information exchange or forming anti-competitive agreements, they can be effectively employed in antitrust-related disputes.

Finally, the crucial consideration for the parties is to ensure the appointment of arbitrators who possess in-depth knowledge of antitrust law. This expertise is essential for resolving disputes that involve complex antitrust considerations.