Navigating DMA claims in the EU’s national courts (part 1): jurisdiction, standing of consumer associations and third-party funding

Private claims under the EU’s Digital Markets Act (DMA) are beginning to reshape the European digital regulation landscape, with new cases recently emerging in France, Germany and the Netherlands. As the Commission continues its public enforcement efforts, the number of private actions (in particular for compensation purposes) will only rise, broadening the scope of DMA disputes in national courts across Europe. We consider some fundamental issues shaping these actions in two blog posts. In this first post, we discuss the threshold issues of jurisdiction for private DMA claims (‘where’), standing of consumer associations in collective actions (‘who’), and third-party funding (‘with which funds’). 

‘Where’: Jurisdiction

In which forum is a private DMA claim likely to be filed? In practical terms, this question concerns the scope for forum shopping and the extent to which non-EU entities can be brought within the jurisdiction of EU courts. For EU-domiciled defendants, jurisdiction is determined under the ‘Brussels I bis’ Regulation (B1B) and, for all others, under national private international law rules — which tend to proceed from similar principles. We highlight below selected key grounds for jurisdiction under the B1B.

The general rule: domicile of the defendant

The general rule is that jurisdiction lies with the courts of the Member State in which the defendant is domiciled (art 4 B1B). The identity of the entity or entities designated as gatekeepers is determinative. The Commission has generally adopted a broad approach in the recitals of its designation decisions. It targets the parent company ‘together with all legal entities directly or indirectly controlled’ by the parent (see eg recital 1 of the Amazon designation decision). As such, all EU-based entities directly or indirectly controlled by a gatekeeper — including national subsidiaries — could potentially be sued in the courts of their domicile. 

However, gatekeepers may seek to challenge this broad interpretation by arguing that only the entity specifically named in the operative part of the designation decision — typically only the parent company based outside the EU — has been formally designated, and that the recitals’ broader language is not binding (Case T-691/14, Servier, [188]). This will lead to some discussion before national courts and the Court of Justice of the EU. 

Anchor defendant

Where there are multiple defendants, an action may be brought in the courts of the Member State where any one of them is domiciled if the claims are sufficiently closely connected (art 8(1) B1B). That defendant can then serve as the ‘anchor defendant’ for the others. A sufficiently ‘close connection’ requires that the anchor defendant and the other defendants be in the same position ‘in fact and in law’ (Case C-352/13, CDC Hydrogen Peroxide, [20]–[21]). 

Defendants should be prepared to challenge attempts at forum shopping by scrutinising whether the factual and legal positions of the anchor and non-anchor entities are genuinely aligned. In particular, gatekeepers may argue that a subsidiary’s involvement in the alleged infringement is too remote or that the claims against different entities raise distinct legal or factual issues, thereby defeating the ‘close connection’ requirement. The Sumal criteria may provide a useful framework in this respect (Case C-882/19, Sumal, [51]). Defendants can argue that entities not named in a DMA non-compliance decision — for example, national retail or logistics subsidiaries — lack the necessary legal, economic and organisational links to the designated gatekeeper, or have no concrete connection to the subject-matter of the alleged infringement.

Only EU-domiciled defendants can be joined using the anchor defendant mechanism of Article 8 B1B. Claimants seeking to sue non-EU parent companies through this route need to rely on national rules of private international law, which usually but not always contain a similar connecting factor. 

Special jurisdiction for matters relating to tort

Claimants may also try to establish jurisdiction on the special ground of jurisdiction for tort (art 7(2) B1B). This ground allows claims to be brought either where the damage occurs or may occur, or where the event giving rise to the damage took place.

Establishing jurisdiction in a single forum on this basis will likely be challenging in the context of the DMA, as the relevant conduct and harm are often cross-border in nature and difficult to locate. This challenge is heightened in consumer collective actions, where one qualified entity represents a multitude of victims, potentially originating from several Member States or dispersed across the territory of a single Member State. Gatekeepers may seek to exploit these difficulties by challenging the localisation of both the harmful event and the resulting damage. Where claimants struggle to pinpoint a specific Member State as the place of harm, defendants may argue that this special jurisdictional ground is unavailable and force claimants to fall back on the general rule of the defendant’s domicile. 

Special jurisdiction for consumers claims

Article 18 B1B allows a consumer to bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or, regardless of the domicile of the other party, in the courts for the place where the consumer is domiciled.

This special jurisdiction ground does, however, only benefit individual proceedings by consumers and cannot be relied upon by — for instance — a consumer association acting on behalf of consumers (Case C-498/16, Schrems v Facebook, [44], [48] and [49]). 

Commentators, including the Commission itself, are advocating for a review of the B1B to regulate jurisdiction in collective (consumer) claims more effectively. 

‘Who’: Standing of consumer associations in collective actions 

Private enforcement of the DMA is likely to be led by consumer organisations bringing collective actions on behalf of affected consumers/users. The legal framework for such actions in the EU will typically be governed by the EU Representative Actions Directive (RAD), which applies — amongst others — to infringements of the DMA (art 42 DMA). In addition to the RAD, collective proceedings may also be brought under domestic collective redress regimes, which vary significantly. 

Only qualified entities may bring representative actions under the RAD

For the purposes of the RAD, a cross-border representative action may only be brought by a ‘qualified entity’, which must be designated as such by an EU Member State (art 7(1) RAD). Those entities must be independent, not pursue profit, have a legitimate interest in consumer protection and comply with transparency requirements (art 4(3) RAD). Herein lies an important difference with collective action regimes in the UK, US and some European national regimes, which allow professional for-profit representatives to act as class representatives. 

Gatekeepers may challenge the designation of qualified entities by arguing that they do not or no longer meet the designation criteria. In that context, gatekeepers could for instance argue that the entity has developed commercial interests that compromise its non-profit status. Such a challenge could result in the dismissal of the representative action for lack of standing. 

The European Commission maintains a publicly accessible list of all designated qualified entities across the EU, which currently comprises predominantly public authorities and consumer organisations. The status of most of these entities remains untested in litigation.

Collective redress outside the RAD framework

Many EU countries maintain parallel collective redress regimes alongside the RAD. Some of these regimes, such as the Dutch and Portuguese ones, are particularly attractive to claimants and funders, for example because they offer more flexible funding structures and litigation is relatively inexpensive.

At the same time, these regimes typically impose strict requirements on class representatives, who must show that they are genuinely representative of the affected group and are pursuing consumer interests rather than purely commercial objectives. This may also involve scrutiny of the class representative’s arrangements and relationship with the funder. Defendants can seek to challenge their standing on the basis of either or all of these aspects. 

‘With which funds’: Third-party litigation funding

The RAD does not prohibit qualified entities from obtaining third-party litigation funding, but it imposes safeguards to protect the integrity of representative actions (art 10 RAD). Conflicts of interest between the funder and claimants must be prevented and third-party funding must not compromise the protection of consumers’ interests. As such, decisions taken by the qualified entity must not be unduly influenced by the funder. Equally, the action may not be funded by a competitor of the defendant. Similar conditions are usually imposed under non-RAD collective redress regimes. 

National courts should assess compliance with these safeguards and can require the qualified entity to refuse or modify the relevant funding arrangement. Disclosure requests targeting the terms of funding agreements will be key for these assessments.

Consumer organisations are calling for enhanced funding mechanisms, including public funding (eg structural support, legal aid schemes, or funds financed by fines or unclaimed damages) and private funding options. As such, further policy developments in this area may follow.

Concluding thoughts

Private DMA claims are rapidly becoming a significant complement to public enforcement and cannot be ignored by gatekeepers. They should adopt a proactive approach to jurisdictional challenges, standing and funding at the earliest stages of proceedings. Early engagement on these threshold issues can significantly shape the trajectory of litigation and, in some cases, dispose of claims before they reach the merits.

Florence Danis is a Partner, Linklaters LLP. 

Harry Slachmuylders is an Associate, Linklaters LLP.

Thomas Reyntjens is a Managing Associate, Linklaters LLP.

Will Leslie is a Partner, Linklaters LLP.