On 8 July 2016, the Dutch Supreme Court delivered its judgment concerning an ongoing discussion in antitrust damages litigation: the availability of a "passing-on" defence.
Dutch courts have taken varying approaches in determining whether an infringer can invoke as a defence against a claim for damages the fact that the claimant was able to raise the downstream prices to its customers and thus "passed on" all or part of the alleged overcharge resulting from the infringement of competition law. In its judgment, the Supreme Court confirms that passing on is a valid defence under Dutch law and gives further guidelines on its application.
The case concerns a civil claim by TenneT against ABB, following on from the European Commission's 2007 infringement decision in which ABB was fined for its participation in the Gas Insulated Switchgear cartel. TenneT claimed that as a result of the infringement it paid an overcharge for the GIS-installation purchased from ABB in 1998. ABB argued that TenneT did not suffer any loss because it passed on the costs of the GIS-installation to its customers.
ABB's passing-on defence was rejected by the District Court for the Eastern Netherlands in January 2013. The District Court viewed the passing-on defence as a specific application of the doctrine ofvoordeelstoerekening (cf. in German: "Vorteilsausgleichung"). According to the District Court, the doctrine's requirement of reasonableness stood in the way of successful reliance on the passing-on defence: it would not be reasonable to allow ABB to rely on the passing-on defence because ABB might escape liability as a result [see our March 2013 newsletter]. In September 2014, the Court of Appeal of Arnhem-Leeuwarden ruled that ABB could invoke a passing-on defence. Unlike the District Court, the Court of Appeal regarded passing-on as an issue that directly affects the level of damages that can be awarded to a claimant and concluded that TenneT's claim reasonably comprised the overcharge minus any part of the overcharge that it passed on to its customers. The Court of Appeal acknowledged that if indirect customers do not sue ABB for any overcharges that were passed on to them, ABB might escape liability for some of the loss it caused [see our October 2014 newsletter].
In its judgment, the Supreme Court ruled that as a matter of Dutch law, the passing-on defence is available. In this context, the Court refers to the EU Antitrust Damages Directive, which states that Member States must ensure that the defendant in an action for damages can invoke a passing-on defence. According to the Supreme Court, the approaches taken by the District Court and by the Court of Appeal should have led to substantially the same result. The Supreme Court goes on to say that courts are free to choose how they qualify the passing-on defence. In any event , the benefit that is conferred onto the claimant in connection with the infringement will be taken into account in the determination of the damages, provided that it is reasonable to do so. And in both approaches, the court can decide that the burden of proving pass-on lies with the defendant.
For a more detailed report on the judgment, see Stibbe's Commercial Litigation Blog.
This article was published in the Competition Law Newsletter of August 2016. Other articles in this newsletter:
- Court of Justice clarifies the legality of royalty payments in the event of revocation or non-infringement of the licensed patent
- General Court confirms fines imposed on the basis of economic continuity in maritime hose cartel
- European Commission imposes record cartel fine on truck manufacturers for price fixing
- European Commission deems support measures in favour of Dutch football clubs in line with State aid rules
- Dutch District Court ruled that parent companies cannot be held liable for damages arising from antitrust infringements committed by their subsidiaries
- ACM lowered fines in the pepper cartel case
- Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation
- Brussels Court of Appeal rules that concerted lobbying efforts of cement producers do not breach competition law
- Belgian competition authority upholds licence refusal to football club White Star
Source: Competition Law Newsletter August 2016