Short Reads

Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation

Dutch Supreme Court confirms the availability of a passing-on defence

Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation

18.07.2016 NL law

Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation

On 8 July 2016, the Dutch Supreme Court handed down a judgment concerning an ongoing discussion in antitrust damages litigation: the availability of a “passing-on” defence (ECLI:NL:HR:2016:1483). 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 the application of this defence.

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 claims that as a result of the infringement it paid an overcharge for the GIS-installation it purchased from ABB in 1998. ABB argues 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 (ECLI:NL:RBONE:2013:BZ0403). According to the District Court, the passing-on defence should be viewed as a specific application of the doctrine of voordeelstoerekening (cf. in German: “Vorteilsausgleichung“). Under this doctrine, the defendant may offset a benefit that was conferred to the claimant against the damages owed for that same wrongdoing, provided there is an adequate causal link between the wrongdoing and the benefit and provided that taking account of the benefit is reasonable (Article 6:100 Dutch Civil Code). According to the District Court, it would not be reasonable to allow ABB to rely on the passing-on defence, as ABB might escape liability as a result.

ABB successfully appealed this judgment. In September 2014, the Court of Appeal of Arnhem-Leeuwarden ruled that ABB could invoke a passing-on defence and concluded that TenneT’s claim (to be determined in a separate stage of proceedings) reasonably comprised the overcharge minus any part of the overcharge that it passed on to its customers (ECLI:NL:GHARL:2014:6766). Unlike the District Court, the Court of Appeal regarded passing-on as an issue that directly affects the level of the damages that can be awarded to a claimant. By passing the alleged overcharge on to his own customers, the claimant effectively reduces the loss he suffers. 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. However, according to the Court of Appeal that is not a concern of Dutch tort law, which is compensatory in nature.

TenneT then filed an appeal with the Dutch Supreme Court. According to TenneT, the passing-on defence should be assessed under the doctrine of voordeelstoerekening. Given the strict interpretation of that doctrine’s requirement of a causal link between the wrongdoing and the benefit conferred onto the claimant in the case law of the Supreme Court, this would likely leave little room for the passing-on defence. Furthermore, as was evidenced by the District Court’s earlier decision, the requirement of reasonableness could also stand in the way of a successful reliance on the passing-on defence.

In its judgment, the Supreme Court rules 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. The legislative proposal to enact this Directive in the Netherlands was submitted to the House of Representatives on 7 June 2016 (See our blog Update on changes in antitrust damages claims legislation in the Netherlands).

Surprisingly, the Supreme Court goes on to say that the courts are free to choose how they qualify the 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. Either way, 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 put the burden of proving pass-through on the defendant.

In this context, the Supreme Court states that if its earlier case law suggested that the doctrine of voordeelstoerekening required a very direct causal link between the wrongdoing and the benefit conferred onto the claimant – which it clearly did – that case law no longer represents good law. In this respect, the Supreme Court ruling is to be regarded as a landmark decision, with implications that potentially reach far beyond the area of antitrust damage claims.

Related news

03.05.2022 NL law
Bijdrage Tijdschrift voor Insolventierecht

Articles - Gertjan Boekraad schreef voor het Tijdschrift voor Insolventierecht een annotatie bij een arrest van de Hoge Raad over de vraag hoe in het faillissement van een bedrijf om te gaan met de vordering van de overheid die een milieuovertreding van dat bedrijf moet herstellen.  

Read more

04.04.2022 EU law
ACM jumps on gun-jumping bandwagon

Short Reads - Companies involved in multi-step acquisitions should beware of potential gun-jumping risks. The Dutch Authority for Consumers and Markets (ACM) has fined a trade association for failing to notify the acquisition of four pharmacies involving a consecutive partial resale. Unlike the European Commission’s gun-jumping fine for partial implementation of a concentration through a ‘warehousing’ two-step acquisition (see our July 2019 newsletter; appeal pending), the ACM’s fine relates to faulty turnover calculations due to an unmaterialized two-step transaction.

Read more

05.04.2022 NL law
Game on for gatekeepers: Digital Markets Act finalised

Short Reads - Now that political agreement has been reached on the final text, the Digital Markets Act (DMA) will enter into force soon. The DMA’s ex ante rules and obligations will apply next to the ad hoc EU and national competition rules. Time for big digital companies to take stock of the potential implications of these additional rules on their day-to-day business operations. See our infographic for a concise overview of the DMA.

Read more

04.04.2022 EU law
The ECN+ Directive implemented in Belgium and introduction of merger filing fees

Short Reads - On 7 March 2022, the Act implementing the ECN+ Directive into Belgian law was published in the Belgian Official Gazette. The Act entered into force on 17 March 2022. Some of the key amendments include (i) the introduction of filing fees for the notification of a concentration, (ii) new fines and penalty payments (including clarifications on the leniency programme), (iii) new dawn raid powers and (iv) the introduction of a regulatory framework for mutual assistance and cooperation within the European Competition Network.

Read more