On 10 January 2017, the General Court ("ruled on the non-contractual liability of EU institutions in an action for damages brought by Gascogne Sack Deutschland GmbH ("Gascogne Sack") and Gascogne. The GC ordered the EU to compensate Gascogne Sack and Gascogne for the damage that they had suffered as a result of the GC's failure to adjudicate within a reasonable time.
The European Commission had fined Gascogne Sack and Gascogne in November 2005 for a cartel on the industrial bags market. The companies subsequently appealed to the GC, which delivered its judgment in November 2011, i.e. after a period of almost 5 years and 9 months. In their appeal before the Court of Justice, Gascogne Sack and Gascogne sought, among other things, to have the judgment of the GC set aside or a reduction of the fine imposed due to the excessive length of the GC's procedure. The Court dismissed their appeal and ruled that the sanction for a failure to adjudicate within a reasonable time "must be an action for damages brought before the General Court, since such an action constitutes an effective remedy" [see our December 2013 Newsletter]. Following this ruling, Gascogne Sack and Gascogne started the current action for damages against the EU at the GC.
In the judgment, the GC first of all assessed whether there had been a failure to adjudicate within a reasonable time and whether this qualifies as a sufficiently serious breach of EU law. It noted that in the GC proceedings, approximately 3 years and 10 months had passed between the end of the written stage of the proceedings and the opening of the oral stage. After considering the factual, legal and procedural complexity of the proceedings, the GC ruled that the reasonable time for adjudication had been exceeded by 20 months. According to the GC, this constitutes a sufficiently serious violation of EU law.
The GC subsequently examined whether Gascogne Sack and Gascogne had suffered damage as a result of this violation. Instead of paying the fine immediately, Gascogne had provided a bank guarantee to the Commission. The GC ruled that Gascogne suffered material damage resulting from having to pay the costs for the bank guarantee during the period in which the reasonable time for adjudication had been exceeded. Furthermore, the GC held that the companies were placed in a prolonged state of uncertainty because of the excessive length of the procedure. Since this necessarily had an influence on the planning of the decisions to be taken and on the management of the companies, Gascogne Sack and Gascogne had also suffered immaterial damages. The GC ruled that the EU was liable for both the material and immaterial damage and ordered the EU to pay damages to Gascogne Sack and Gascogne, which amounted to approximately EUR 57,000 in total.
This article was published in the Competition Law Newsletter of February 2017. Other articles in this newsletter:
1. Court of Justice confirms Commission's approach in its first hybrid settlement case
2. Court of Justice clarifies rules on evidence in bathroom fittings cartel judgments
3. Court of Justice confirms the fine imposed on Toshiba and Panasonic in the cathode ray tubes cartel
4. District Court of Rotterdam confirms that investment firms may be held liable for conduct of portfolio companies