Competition Law Newsletter

Competition Law Newsletter

Competition Law Newsletter

02.03.2015 NL law

1. General Court confirmed that if the Commission orders a specific amount of State aid to be recovered, this amount should be assessed carefully
2. German Court of Appeal confirmed judgment ruling assignments to claims vehicle to be contrary to public morals
3. Brussels Court of Appeals found unlawful the 2006 inspections in the travel sector

1. General Court confirmed that if the Commission orders a specific amount of State aid to be recovered, this amount should be assessed carefully
The General Court ("GC") partially annulled a Commission decision ordering Ireland to recover alleged aid to beneficiary airlines including Ryanair and Aer Lingus of EUR 8.00 per passenger per short-distance flight. In two judgments of 5 February 2015, the GC ruled that the Commission erred in determining the amount of the State aid to be recovered (T-473/12 and T-500/12).

If the Commission establishes that a Member State has granted State aid incompatible with the internal market, it will order recovery in order to restore competitive market conditions. According to settled case-law, it is sufficient for the Commission to include in its recovery decision information enabling the recipient of the aid to work out the amount to be paid back without much difficulty. However, if the Commission decides to order the recovery of a specific amount, it must assess as accurately as possible the actual value of the benefit received.

The factual background to the cases is the air travel tax ("ATT") imposed on airlines in Ireland since 30 March 2009. Until 1 March 2011, different rates applied for short-distance flights (less than 300 km) and long-distance flights. The Commission considered the discounted ATT of EUR 2.00 for short-distance flights to be State aid incompatible with the internal market as it benefited domestic flights in comparison to cross border flights for which an ATT of EUR 10.00 was applicable. The Commission furthermore ordered that the amount of the aid was equal to the difference between the ATT for short-distance flights and the ATT for long-distance flights.

The beneficiary airlines appealed the decision to the GC. They did not dispute that the reduced ATT constituted State aid, but they contested the extent of the advantage, and therefore, the amount to be recovered.

The GC sided with the airlines and ruled that the advantage for the airlines does not necessarily consists of the difference between the two rates. It considered that the economic advantages of the reduced ATT could have been passed on in full or in part to the passengers of the beneficiary airlines. Only if the airlines had systematically increased the prices of the short-haul flights with EUR 8.00, could the Commission have concluded that the advantage enjoyed by the airlines was always EUR 8.00. The Commission had not established such facts. Moreover, the GC ruled that the Commission failed to show that the recovery of EUR 8.00 per passenger was necessary in order to ensure the re-establishment of the status quo ante, since the airlines could not retroactively recover that amount from their customers. Therefore, the recovery would actually be liable to lead to over-recovery, and therefore create an additional distortion of competition. The GC thus annulled the Commission decision.



2. German Court of Appeal confirmed judgment ruling assignments to claims vehicle to be contrary to public morals
On 18 February 2015, the German Court of Appeal (the Oberlandesgericht Düsseldorf) confirmed that the assignment of claims to a claim vehicle in a follow-on action for damages in the cement cartel (COMP/C.39181) were void.

In December 2013, the Landgericht Düsseldorf had decided that a subsidiary of claim vehicle Cartel Damage Claims SA ("CDC") violated German public morals ("gute Sitten") as it was foreseeable at the time the damage claims were assigned that the claim vehicle would not be able to meet a possible future litigation cost order (see our January 2014 newsletter article). The whole risk of litigation was therefore unjustifiably shifted to the defendants. The assignments were for this reason void. CDC unsuccessfully appealed this judgment before the Oberlandesgericht Düsseldorf.

The judgment by the Oberlandesgericht Düsseldorf (Case Az. VI U 3/14) was given orally and the reasoning of the Court is not available yet. According to verbal announcement by the Court, CDC was not granted the right to file a further appeal to Germany's Supreme Court (the Bundesgerichtshof). However, CDC is considering requesting leave for a further appeal from the Bundesgerichtshof.

This is a leading case in the EU regarding the validity of assignments of cartel damage claims to claim vehicles. The question of the validity of assignments to claim vehicles is at issue in several proceedings before courts within the EU. One of them is the paraffin-wax case in the Netherlands, in which the District Court of The Hague recently issued a judgment rejecting the argument that assignments of damage claims to another subsidiary of CDC were void under German law (see our January 2015 newsletter article). Although the judgment by the Oberlandesgericht Düsseldorf  deals with German law, it may also have an impact on the discussions concerning the validity of assignments of cartel damage claims under the law of other EU countries.
3. Brussels Court of Appeals found unlawful the 2006 inspections in the travel sector
In early 2006, the Belgian competition authorities organized inspections at the premises of several tour operators and travel agents. In 2011, the Competition Prosecutor communicated a "motivated report" to several travel agents, as well as their professional associations. Following an oral hearing, the Belgian Competition Council took the case under deliberation in 2012. No decision ensued, however, and after the entry into force of a new competition act (incorporated in the new Code of Economic Law) in 2013, the competition authorities reinitiated the case by (re-)communicating the prior "motivated report" to the parties concerned as a "statement of objections" (based on the same case file) under the new Code. Following an appeal by the travel agents concerned, however, the Brussels Court of Appeal ("Court of Appeal") on 18 February 2015 ruled that the competition authorities are prohibited from using any information received during or pursuant to the inspections of 2006. (The judgment is not yet published).

The reason for the Court of Appeal's judgment is twofold. First, the Court of Appeal found the absence of a judicial warrant (i.e. a warrant from an independent juge d’instruction) authorizing the dawn raids to be incompatible with the right to privacy, enshrined in Article 15 of the Belgian Constitution. Even if at the time of the inspections the law did not require a judicial warrant for inspections at company premises, the Court, referring to the case-law of the Belgian Constitutional Court, decided that the absence of a judicial warrant can only be justified if strictly necessary to achieve a lawful aim. In the present case, the Court of Appeal found Article 15 of the Constitution to be infringed based on (i) the fact that the new Code of Economic Law effectively requires all inspections to be preceded by a judicial warrant, and (ii) having regard to the one year time lapse between the initial receipt of relevant information leading to the opening of the investigation and the actual moment of the inspections.

Second, the Court found that the parties did not possess a legal means to contest the lawfulness of the inspections before an independent judge within a reasonable time following the inspections (in violation of Article 6 ECHR and Article 47 of the European Charter of Fundamental Rights). No such possibility was (expressly) provided for under Belgian law. Furthermore, even if the law applicable at the time had to be interpreted as creating an opening for the parties to contest the legality of the inspections (after the judgment of the Belgian Constitutional Court of 22 December 2011), no claim by the parties could be effective at this stage, since the information obtained pursuant to the inspections had already been used to prepare the motivated report earlier (i.e. before the judgment of the Constitutional Court).

The Court of Appeal subsequently concluded that, having regard to the infringement of the parties' rights of defence and the irrevocability of the inspections, the sole remedy consists in prohibiting the competition authorities from using any formation received during, or pursuant to, the inspections of 2006.  

The judgment of 18 February 2015 constitutes an important setback for the newly transformed Belgian competition authority. The judgment moreover carries important potential implications for other cases that predate the 2013 competition act.




Related news

06.06.2019 NL law
Dutch court: insufficient substantiation? No follow-on cartel damages action

Short Reads - Dutch courts are forcing claimants (including claims vehicles) to be well-prepared before initiating follow-on actions. The Amsterdam District Court in the Dutch trucks cartel follow-on proceedings recently ruled that claimants – specifically CDC, STCC, Chapelton, K&D c.s. and STEF c.s. – had insufficiently substantiated their claims.

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