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District Court of Gelderland denies passing-on defence in antitrust litigation related to the GIS-cartel

District Court of Gelderland denies passing-on defence in antitrust litigation related to the GIS-cartel

District Court of Gelderland denies passing-on defence in antitrust litigation related to the GIS-cartel

04.04.2017 EU law

On 29 March 2017, the District Court of Gelderland rendered a ruling in the "damage assessment procedure" ("schadestaatprocedure") between TenneT and ABB concerning an overcharge TenneT allegedly paid for a gas insulated switchgear installation ("GIS-installation"). The District Court awarded an amount of EUR 23 million plus interest to TenneT and denied ABB’s defence that TenneT did not suffer any loss because it passed on the costs of the GIS-installation to its customers (the "passing-on defence").

In previous decisions by the District Court for the Eastern Netherlands, the Court of Appeal of Arnhem-Leeuwarden and the Dutch Supreme Court, ABB was held liable vis-à-vis TenneT for ABB’s participation in the "Gas Insulated Switchgear cartel" between the years 1998-2004 [see the July 2016 Stibbe Litigation Blog]. Following the judgment of the Supreme Court on 8 July 2016, the case was referred to the District Court of Gelderland to rule on the quantum of damages.

In defence against TenneT's claim, ABB had submitted two economic expert reports arguing - with references to ABB’s profit margins - that TenneT had not paid any overcharge. ABB moreover requested the District Court to rule that these reports would fall under a "confidentiality ring", meaning i.a. that the judgment should not contain any references to ABB's margins. The District Court denied this request on the basis that third parties had a valid interest in obtaining an unredacted judgment, given ABB's reliance on the passing-on defence. As for the substance, the court ruled that the expert reports did not provide sufficient insight into ABB's input and production costs. Instead, the District Court ruled that TenneT had furnished enough evidence to substantiate its claim that it had paid an overcharge.

As for ABB's passing-on defence, the District Court accepted that TenneT, an electricity transmission system operator, was likely to have passed on the overcharge to its direct customers who in turn passed on this overcharge to the general public. According to the Court, however, the general public is unlikely to sue ABB for damages given the costs of legal proceedings. Moreover, any damages awarded to TenneT would – in the Court's view – likely end up benefitting the general public because the Dutch state is a 100% shareholder of TenneT. In a curious consideration obiter, the Court appears to imply that the fact that ABB received immunity from fines in the context of the European Commission's leniency programme, militates in favour of the Court's decision to reject the passing-on defence. In light of these circumstances, the Court ruled that it would not be reasonable to accept ABB's passing-on defence.

The District Court's reasoning is similar to its reasoning in January 2013, when it ruled that it would not be reasonable for ABB to escape liability using the passing-on defence. This ruling was however overturned on appeal because the compensatory nature of Dutch tort law is not concerned with the fact that ABB might escape some or all of its liability. ABB now has three months to decide if it wants to appeal the judgment of 29 March 2017.

This article was published in the Competition Law Newsletter of April 2017. Other articles in this newsletter:

  1. Court of Justice confirms the fine imposed on Samsung in the cathode ray tubes cartel
  2. Court of Justice rules on the Hearing Officer's competence to resolve confidentiality requests
  3. General Court annuls European Commission's merger blocking decision in UPS/TNT for procedural errors 
  4. European Commission proposes a new Directive to empower national competition authorities to be more effective enforcers of EU competition law rules
  5. European Commission launches anonymous whistleblower tool

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