Competition Litigation guide in iran 2023
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April 28, 2023
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April 28, 20231 Legal framework
1.1 Which laws regulate competition in your jurisdiction?
For many years, Iran did not have specific competition legislation. However, certain provisions on competition law issues were included in different statutes. Examples of the Iranian competition provisions prior to 2008 included:
- Articles 1 and 2 of the Civil Responsibility Act (1960);
- Article 133 of the Bill of Amendment of the Commerce Code (1969); and
- Article 64 of the Electronic Commerce Act (2004).
Iran introduced its first Competition Law in 2008 in Chapter 9 of the Privatisation Act (the Act of Implementation of Principle 44 of the Iranian Constitution Law). The stated objectives of the Competition Law are to promote competition and prohibit monopolies. The Competition Law addresses various issues, including pricing, tying agreements and territorial restrictions.
In 2016 the Parliament ratified the Executive Bylaw on Research, Investigations, Complaints Handling and Enforcing Anti-competitive Decisions.
1.2 Which authorities are responsible for enforcing the competition legislation? What is their general approach to enforcement?
Under Article 53 of the Competition Law, the Competition Council (CC) was created to enforce the competition legislation. In addition, to handle the professional, executive and other affairs of the CC, the National Competition Council was established as an independent government institution under the supervision of the president of Iran.
Certain sectoral regulators, such as the Communication Regulatory Authority, also have specific duties in relation to anti-competitive approaches, according to the relevant regulations.
According to Article 62 of the Competition Law, the CC is the sole authority that investigates anti-competitive conduct and makes decisions accordingly. It will take this action either on its own initiative or based on complaints from natural or legal persons.
In general, the CC has the power to autonomously impose fines and other remedies for infringements of the Competition Law.
2 Private claims
2.1 What types of private claim may be brought for breach of competition law in your jurisdiction?
According to the Competition Law, individuals and companies cannot bring a claim for a breach of the Competition Law directly before the Iranian courts; all claims must first be submitted to the Competition Council (CC).
According to Article 66 of the Competition Law, individuals or legal entities that have incurred losses due to anti-competitive conduct can claim losses and damages before the competent court once the CC has issued its final decision.
In addition, under Article 61 of the Competition Law, the CC can issue the following decisions regarding anti-competitive conduct:
- order the cancellation of any contract, agreement or understanding that involves anti-competitive conduct;
- order the parties to reach agreement in order to stop the anti-competitive conduct;
- order the cessation or repetition of any anti-competitive conduct;
- disseminate general information to make the market more transparent;
- order the removal of directors who have been appointed contrary to the provisions of the Competition Law;
- order the ceding of shares or capital of firms or companies secured contrary to the Competition Law;
- order the suspension or annulment of any merger deemed contrary to the Competition Law or the divestiture of the merger;
- order the return of extra income or the confiscation of property deemed to have been secured through anti-competitive conduct by competent judicial experts;
- order a firm or company to cease activities in any specific field, region or region;
- order a firm or company to observe minimum supply and price ranges under monopoly conditions; and
- impose a cash penalty of between IRR 10 million and IRR 1 billion in case of a violation of the Competition Law.
The claimant can then enforce the CC’s decisions through the competent court.
2.2 What is the legal basis for bringing a claim for breach of competition law?
The primary legal basis for damages claims is Article 66 of the Competition Law. However, the Competition Law does not define the types of damages which can be claimed. Therefore, the claimant can seek remedies for all damages incurred according to the Civil Liability Law, except a loss of profit claim, which the Iranian courts cannot accept according to the Civil Procedure Code.
3 Parties
3.1 Who has standing to bring a claim for breach of competition law?
Generally, according to Article 61 of the Competition Law, any natural or legal person that has suffered as a result of a breach of the Competition Law can bring a claim, including:
- the prosecutor general or local prosecutor;
- the State Audit Court;
- general inspection organisations;
- sector regulatory bodies;
- government-affiliated organisations and institutions;
- guild groups;
- consumer rights associations; and
- non-governmental organisations.
Furthermore, the National Competition Council can bring a claim for breach of competition law and initiate an investigation procedure.
3.2 Can a claim for breach of competition law be brought against parties outside the jurisdiction?
A breach of competition law claim should first be submitted to the Competition Council in Tehran, which has exclusive jurisdiction for examining and investigating anti-competitive conduct.
3.3 Can a claim for breach of competition law be brought against individuals, or only companies?
According to Article 43 of the Competition Law, a claim due to a violation of the Competition Law can be brought against both individuals and legal entities.
4 Collective actions
4.1 Is it possible to bring a collective action for breach of competition law in your jurisdiction? If so, what is the applicable regime?
Generally, the Iranian legal system does not recognise collective actions. According to Article 2 of the Civil Procedure Code, the principle of privacy applies to claims and disputes. Therefore, only the person that suffered the loss or its legal representatives can bring the suit in Iran.
Specific regulations in certain sectors, such as the Electronic Commercial Act (2009), allow for collective action by authorising organisations that protect consumer rights to file suit as a petitioner on behalf of consumers.
4.2 Do collective actions proceed on an 'opt-in' or an 'opt-out' basis?
As outlined in question 4.1, the Iranian legal system does not recognise collective actions for breaches of the Competition Law.
4.3 Do collective actions require certification? If so, what requirements must be met to obtain certification?
Please see question 4.2.
Generally, the Iranian legal system does not recognise collective actions. According to Article 2 of the Civil Procedure Code, the principle of privacy applies to claims and disputes. Therefore, only the person that suffered the loss or its legal representatives can bring the suit in Iran.
Specific regulations in certain sectors, such as the Electronic Commercial Act (2009), allow for collective action by authorising organisations that protect consumer rights to file suit as a petitioner on behalf of consumers.
5 Forum
5.1 In what forum(s) are claims for breach of competition law heard in your jurisdiction?
According to Article 62 of the Competition Law, the Competition Council (CC) is the sole authority that investigates anti-competitive conduct and makes decisions accordingly.
However, in some sectors, such as telecommunications, the applicable regulations authorise specific organisations to handle relevant competition claims.
In addition, the State Penitentiary Organisation was established specifically to investigate economic crimes and protect consumers. This organisation can handle consumer claims related to the Consumer Law, which can be considered a matter of competition law.
Furthermore, once the CC has decided on the applicable sanctions and penalties for an infringement of the Competition Law, the claimant can enforce this decision before the public civil courts.
6 Bringing a claim
6.1 What is the limitation period for claims for breach of competition law in your jurisdiction?
The initiation of a competition claim is not subject to any limitation period in Iran. However, according to Article 66 of the Competition Law, natural or legal persons that have incurred losses due to anti-competitive conduct must enforce a final decision of the Competition Council (CC) or the Retrial Board in the competent court within one year of its issuance.
6.2 What are the formal requirements for bringing a claim for breach of competition law?
A claimant can bring a claim to the CC by:
- filing a petition together with evidence proving the claim; and
- paying the CC’s administrative fees.
6.3 What are the procedural and substantive requirements for bringing a claim for breach of competition law?
The claimant should submit its claim online through the CC’s website, along with the names and addresses of the parties, their representatives and evidence of the proof for the claim.
The CC will then initiate an investigation procedure urgently at the request of a CC member and with the approval of the CC.
Once the investigation is completed, the CC will hold a trial and decide on the same day or at the latest within one week thereafter.
6.4 What are the implications if a public enforcement action in relation to the same behaviour is pending? Can a claim still be brought?
A claimant can still bring the claim to the CC if a public enforcement action is pending in relation to the same anti-competitive conduct.
6.5 How is jurisdiction over the claim determined?
The CC has exclusive jurisdiction over the claim, and not the competent public court.
Once the CC has issued its final judgment, the claimant can enforce the judgment and claim for damages in the competent court.
The Civil Procedure Code will determine the competent court, which may be either:
- the court at the place of residence of the defendant; or
- the court at the place where the anti-competitive conduct occurred.
6.6 How is the applicable law determined?
The Competition Law applies to claims concerning anti-competitive conduct.
The Executive Bylaw on Research, Investigations, Complaints Handling and Enforcing Anti-competitive Decisions (2016) sets out the procedural requirements for bringing competition claims.
If the Competition Law and the executive bylaw are silent on a matter, the Civil Procedure Code will apply accordingly.
6.7 Under what circumstances must security for costs be provided?
No security for costs is required for a claimant to bring a claim before the CC. Once the CC has issued its decision, the petitioner can enforce it before the competent court. However, the defendant can request the Retrial Board to reconsider and re-examine the CC’s decision. In this case, the board, after receiving security for costs, will halt enforcement of the CC’s decision.
Furthermore, once the claimant requests enforcement of a decision of the CC or the Retrial Board, the court can order an interim remedy by obtaining security for costs from the petitioner.
6.8 Are interim remedies available in competition litigation? If so, how are they obtained?
Once the CC has determined that the Competition Law has been infringed, the claimant can apply to the competent court seeking damages.
The claimant can request interim measures to protect its rights. Provisional remedies include measures such as:
- seizure of the defendant’s assets; and
- a temporary order to terminate the defendant’s agreements or other anti-competitive conduct.
The claimant can request interim measures before the commencement of litigation or during the litigation until a final judgment has been issued. The claimant must pay security for costs to the court, which will then decide on the interim remedy request.
The claimant can enforce the interim remedy if the court accepts the request.
7 Disclosure and privilege
7.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply?
Article 68 of the Competition Law sets out the responsibilities and limitations of the power of:
- the Competition Council (CC);
- the Retrial Board; and
- the National Competition Council.
Article 68(2) states that members and former members of the CC and the Retrial Board, and staff of the National Competition Council, must not:
- reveal any inside information on firms, companies or people which they obtained in the course of conducting investigations and fulfilling their duties; or
- use such information to their own advantage or that of a third party.
Further, Article 75 of the Competition Law sets out the penalties associated with a breach of the disclosure rule. Anyone who is subject to the duty of non-disclosure under the Competition Law and who nonetheless uses inside information to his or her advantage or that of a third party will be sentenced to:
- between six months’ and two years’ imprisonment; and/or
- a cash penalty of between IRR 40 million and IRR 400 million.
He or she will also be liable to compensate for the damage caused as a result of the disclosure or circulation of the information.
The Competition Law is silent on the exceptions that apply to the non-disclosure rule. However, the information can be disclosed to the public with the authorisation of the court or the owner of the information.
7.2 What rules on third-party disclosure apply in your jurisdiction?
According to Article 60 of the Competition Law, the Competition Council (CC) can serve a third-party disclosure order. Article 60(b)(3) states that the CC can request reports, information, documents, evidence and records (in both hard-copy and electronic form) in connection with the anti-competitive conduct from any natural or legal person.
Article 60(b)(2) authorises the CC to summon anyone whose presence is necessary to investigate the complaint.
7.3 What rules on privilege apply in your jurisdiction?
The concept of legal privilege is not explicitly recognised under Iranian law and regulations.
All regulations addressing confidentiality – such as Article 81(2) of the Bylaw on the Legal Independence of the Iranian Bar Association, on the responsibility of lawyers to protect confidential information – can be revoked by law or court order.
Furthermore, the Iranian courts can revoke non-disclosure clauses in contracts by law and regulation or court order; no damages can be claimed as a result of such disclosure.
8 Evidence
8.1 What types of evidence are permissible in your jurisdiction? Is expert evidence accepted?
According to Iranian law, a claimant can present several types of evidence to prove an infringement of the Competition Law. The Competition Law provides a broad definition, under which ‘antitrust evidence’ includes, among other things:
- “reports, information, documents, evidence and records (including paper and electronic types)” (Article 60(b)(3)); and
- testimony (Articles 60(b)(1) and (2)).
According to Article 60(b)(4) of the Competition Law, the Competition Council (CC) can invite experts and specialised institutions to participate and seek their comments on research and investigations.
8.2 What is the applicable standard of proof?
As a civil law country, Iran has adopted the general standard of proof, which means that the claimant must fully convince the CC, beyond any reasonable doubt, of all claim requirements, including the chain of causation.
The CC will decide according to the persuasiveness of the evidence without being bound by a pre-determined evidentiary or probability threshold.
8.3 On whom does the burden of proof rest?
The general principle that the claimant bears the burden of proof stands in Iranian law, including the Competition Law.
However, in relation to unilateral anti-competitive conduct, which is the subject of Article 45 of the Competition Law, there are evidentiary presumptions that, in practice, shift the burden of proof to the defendant. The CC will assume that anti-competitive conduct has occurred based on evidence of certain behaviour and elements. The claimant need not demonstrate the effects of this anti-competitive behaviour or prove the damages. The defendant must then rebut these presumptions based on more specific evidence to the contrary. An example is Article 45(d), which provides that aggressive pricing behaviour is anti-competitive.
On the other hand, in relation to collective anti-competitive behaviour or contractual conduct (Article 44), the general principle that the burden of proof rests with the claimant.
Further, once the CC has found an infringement of the Competition Law, the claimant can enforce its decision and claim damages before the competent public court. In this case, the claimant must prove:
- the damages that it has incurred; and
- the relation between the defendant’s act and the compensation sought.
8.4 What defences are typically available in competition litigation?
According to Article 62 of the Competition Law, the CC must set a date for the investigation of complaints. The CC will invite the parties to the dispute to the session. The defendant can:
- attend the session;
- have its attorney participate in the session; or
- submit a bill of defence to the CC.
The defendant can further:
- present evidence to rebut the claim of anti-competitive behaviour; or
- object to the damages claimed or the chain of causation of the damages.
9 Settlement
9.1 Can the proceedings be discontinued without a full trial? If so, how; and what are the implications?
Under Article 13 of the Executive Bylaw on Research, Investigations, Complaints Handling and Enforcing Anti-competitive Decisions, a request by the claimant for the Competition Council (CC) to discontinue the search, investigation and litigation process due to a settlement with the defendant can be accepted only if the CC determines that there are insufficient grounds to prove anti-competitive conduct. To terminate the trial, the CC should also believe that the infringement is not significant or noteworthy.
In the enforcement stage, at the first-instance public court, the parties to the litigation can discontinue the litigation according to Article 178 of the Civil Procedure Code. The parties can agree to terminate the litigation within or outside the court.
The court will enforce the parties’ agreement, which the parties cannot revoke.
9.2 In the case of collective actions, is collective settlement possible? If so, how; and what are the implications?
As outlined in question 4.1, the Iranian legal system does not recognise collective actions or settlements.
In the enforcement stage, at the first-instance public court, the parties to the litigation can discontinue the litigation according to Article 178 of the Civil Procedure Code. The parties can agree to terminate the litigation within or outside the court.
The court will enforce the parties’ agreement, which the parties cannot revoke.
10 Court proceedings
10.1 Are court proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?
According to Article 352 of the Criminal Procedure Code, court proceedings are public unless requested by the claimant or the parties in the case of forgivable crimes. The court may further decide to hold private proceedings.
Further, if the court determines that public proceedings would harm public security, religious sentiments or ethical values, it can order the proceedings to be held in private.
By contrast, the Civil Procedure Code is silent on whether the public can access the courtroom. However, in practice, the court hearing will be public unless the parties request a private hearing and the court accepts the same.
The hearing cannot generally be recorded; and no one can publish court information which includes the defendant’s name and other details. In some cases, a judge may authorise the recording of a court hearing under its supervision.
In the enforcement stage, at the first-instance public court, the parties to the litigation can discontinue the litigation according to Article 178 of the Civil Procedure Code. The parties can agree to terminate the litigation within or outside the court.
The court will enforce the parties’ agreement, which the parties cannot revoke.
10.2 How do the court proceedings unfold in your jurisdiction?
The first stage involves:
- the preparation and drafting of the application to the court;
- the collection of evidence; and
- the identification of the competent court.
The claimant must then submit the application to the competent first-instance court with all evidence and documents required, including the Competition Council’s (CC) decision.
The court will identify the court branch in which the case should be heard. The court will examine the CC’s decision and will order its enforcement. The claimant can take the order to the Executive Court to implement the decision.
If the claimant has suffered further damages which were not mentioned in the CC’s decision, the court will hold a hearing session and invite the parties to attend. The claimant can change the statement of claim by the end of the session. The defendant will present legal arguments against the claim. The court may call for experts and witnesses during the trial.
Once the judgment has been issued, the defendant has the right to appeal it in the appeal court. If the appeal court decides in favour of the claimant, the judgment becomes final and can be enforced.
10.3 What is the typical timeframe for proceedings?
The general duration of court proceedings depends on the complexity of the case, including factors such as:
- the amount of evidence;
- whether experts are involved or a third party joins the procedure;
- whether information must be sought from the government or other organisations; and
- reliance on other cases.
In a simple matter, it generally takes between eight months and one year for the issuance of a first-instance decision. It takes another six to eight months for the decision to become final and binding.
The enforcement stage can take six months to one year.
10.4 What rules apply to the joinder of third parties?
According to Article 130 of the Civil Procedure Code, a third party can join the action during the court proceedings if it believes that it is a beneficiary in the outcome of the legal suit.
If a litigant wishes to involve a third party in the court proceedings, it must submit a request to the court by the end of the first hearing session. If the court accepts the request, it should submit a statement of the third-party invitation to the court.
10.5 To what extent do the decisions of national or foreign competition authorities influence the court's decision?
The CC is the sole authority that initially handles competition cases in Iran. Once the CC has found a violation of the Competition Law, the court can enforce its decision or issue a judgment on the damages incurred. Therefore, the court does not conduct a substantive review of the case.
The Iranian courts may enforce the decisions of foreign courts based on the provisions and conditions elaborated in the Civil Procedure Code and the Law on the Enforcement of Civil Judgments. However, the enforcement of decisions of non-judicial foreign competition authorities is not recognised under Iranian law and these cannot influence the court’s decision.
11 Remedies
11.1 What remedies are available in competition litigation in your jurisdiction?
In criminal cases, remedies include criminal fines and prison sentences.
The civil law remedies available for infringements of the Competition Law include:
- an order to cease the anti-competitive conduct;
- pecuniary penalties;
- adverse publicity orders;
- divestiture of the merger;
- the ceding of shares or capital for corporations;
- a prohibition on operating in a specific field or region;
- an order to observe minimum supply and price ranges under monopoly conditions;
- disqualification of the managers of the corporation;
- damages; and
- other remedies mentioned in Article 61 of the Competition Law.
11.2 Are punitive damages awarded in your jurisdiction?
The Iranian legal system does not recognise punitive damages. However, Article 61 of the Competition Law introduces certain remedies which aim to punish the defendant rather than compensate the claimant. For instance, Article 61(4) addresses the adverse publicity order as a type of punitive damages.
11.3 Will the courts consider any fines imposed by the competition authorities in deciding on the quantum of damages? What other factors will it consider in this regard?
The court does not consider the fines imposed by the Competition Council when setting damages. The claimant can bring a claim for the total damages it has suffered due to the competition contravention.
12 Appeals
12.1 Can the decision of the court or tribunal be appealed? If so, on what grounds and what is the process?
Yes, under Section 61 of the Competition Law, parties can appeal a decision of the Competition Council (CC) within 20 days of receipt of the decision, or two months for parties living abroad. If the decision is not appealed within this period, it will be deemed final and binding.
The Retrial Board will examine the appeal request. The board is located in Tehran and consists of the following persons:
- three Supreme Court judges, chosen by the head of the judiciary;
- two economic experts, proposed by the Ministry of Economic Affairs and Finance and a presidential decree; and
- two experts in commercial, infrastructural, and industrial affairs, proposed by the Ministry of Industrial and Mines and a presidential decree.
The board can assign specialised institutions formed under special regulations to conduct investigations on the anti-competitive conduct.
The board can invite the disputing parties to present their explanations. The parties can also request to appear at a hearing or submit a bill of defence. Otherwise, the board will make its decision based on the available recorded evidence and proof.
The board can:
- reject the CC’s decision;
- confirm, modify or amend it; or
- make other decisions.
The board’s decision will be final and binding.
The beneficiary party or a third party with legal benefit can enforce the decision and claim total damages in the public court based on the final decision issued by the board. The court’s decision on granting damages can also be appealed to the appeal court.
13 Costs, fees and funding
13.1 What costs and fees are incurred when litigating in your jurisdiction? Can the winning party recover its costs?
When bringing a claim before the Competition Council (CC), the claimant must pay the CC’s duty and attorneys’ fees.
If the claimant brings a claim for damages to the first-instance public court, the court fee will depend on the amount in dispute (3.5% of the amount of the claim). In the case of large claims, the court fee is a lower percentage of the claim. In addition to the court fee, the claimant will regularly incur attorneys’ and economic experts’ fees.
The winning party will recover the court fee and reasonable attorneys’ fees as assessed by the court (not the actual attorneys’ fees paid).
13.2 Are contingency fees and similar arrangements permitted in your jurisdiction?
Contingency fees are acceptable in the Iranian legal system. However, they are not recommended in the Iranian litigation process, as attorneys’ fees and the method of their calculation should not create unnecessary incentives for litigation that is not in the interests of any of the parties.
13.3 Is third-party funding permitted in your jurisdiction?
No rule or law in Iran expressly prohibits third-party funding. Article 10 of the Civil Law states: “Private contracts are permitted to the parties unless they are not in explicit opposition against the Law. This article expresses the freedom of contract and respects the parties’ decisions.”
Therefore, third-party funding is legal under Article 10 of the Civil Law. Hence, it is possible to establish such an entity under Iranian law.
14 Trends and predictions
14.1 How would you describe the current competition litigation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The independence of the competition authorities from political power is critical to ensure effective competition law enforcement. The Competition Council (CC) needs such independence in order for its decisions to be enforced.
The Competition Law is relatively new and needs further development. In some sectors, more specialised competition regulations should be in place. For instance, automobile manufacturing and digital trade are two of the sectors in which the CC has limited powers to challenge anti-competitive conduct.
The CC cannot enforce its decisions itself; instead, the claimant must bring the matter to the public court for enforcement and collection of damages. This procedure makes competition litigation slow and less effective.
Furthermore, the decisions of the CC as an administrative institution can be appealed and challenged in the Administrative Court of Justice, which is against the objectives of the Iranian competition law.
Another recent development is the connection of the CC to e-government services, which will help it to collaborate more closely with other government departments.
15 Tips and traps
15.1 What would be your recommendations to parties facing competition litigation in your jurisdiction and what potential pitfalls would you highlight?
Claimants that wish to initiate competition litigation should calculate the damages that they have incurred with the help of experts and accountants.
According to Article 48 of the Electronic Commerce Act, class action consumers can choose to pursue class action litigation for anti-competitive conduct in the e-commerce sector. A claimant in a competition dispute in this sector can avail of this approach and jointly bring a claim to court with several other claimants.
On the other hand, large and medium-sized companies should comply with the Competition Law when dealing with and exchanging sensitive information with competitors, customers and suppliers.
In addition, companies with a dominant position should ensure that they do not abuse it.
Companies should also conduct merger control checks before participating in any M&A activity. Foreign companies should obtain a foreign investment licence in Iran for merger, acquisition and joint venture agreements in order to enjoy protection as Iranian investors.
One particular pitfall is that the Competition Council (CC) cannot enforce its decisions. Instead, these decisions must be executed in the public court, which is a lengthy procedure.
Furthermore, certain punishments applied by the CC are not prohibitory and the claimant cannot rely on the CC itself to compensate for the damages. For instance, Article 61(12) of the Competition Law introduces cash penalties of up to IRR 1 billion for abuse of a dominant power by companies. This amount can be modified every three years according to the Executive Bylaw on Research, Investigations, Complaints Handling and Enforcing Anti-competitive Decisions. However, given the considerable turnover of large and dominant companies, this penalty is not considered to be prohibitive for the infringer.
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