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Dutch court rules on antitrust damages claim in gas-insulated switchgear case

Dutch court rules on antitrust damages claim in gas-insulated switchg

Dutch court rules on antitrust damages claim in gas-insulated switchgear case

06.12.2018 NL law

On 28 August 2018, the Court of Appeal Arnhem-Leeuwarden ruled on the appeal brought by Alstom in the gas-insulated switchgear case. The Court considered several issues commonly raised in follow on-proceedings, such as jurisdiction, applicable law and liability of group entities.

The ruling confirms that civil courts attach great value to a Commission's infringement decision in follow-on damages claims. The infringement decision does not only have binding evidentiary value, it is also considered leading when it comes to group liability issues. Considering the infringement decision's possible impact on follow-on damages claims, companies are wise to spell out the infringement decision and carefully consider the arguments raised at the European courts.

In 1993, Alstom sold a GIS-installation to TenneT's predecessor for a switching substation in Meeden, the Netherlands. In 2008, the European Commission decided that several producers of GIS-installations – including Alstom –operated a cartel on that market. Following the Commission decision, TenneT started legal proceedings against Alstom to claim damages for the overcharge it had allegedly paid for the GIS-installation in Meeden. The District Court agreed with TenneT and awarded the full amount of damages claimed [see our July 2015 Newsletter].

On appeal, Alstom argued that Dutch law was not the applicable law. Both Alstom's participation in the cartel and the price-setting occurred in France; based on the lex loci delicti-rule, French law should therefore have been applied. The Court of Appeal ruled that the market rule (marktregel) takes precedence over the lex loci delicti-rule. The market rule entails that the applicable law is the law of the country where the anticompetitive conduct has influenced the competitive conditions. In this case, that country was the Netherlands, as it concerned a GIS-installation situated in the Netherlands, which was part of the Dutch high-voltage grid network, the purchase agreement was concluded in the Netherlands and the anticompetitive agreements also covered the Dutch market.

Furthermore, Alstom alleged that TenneT's claim had expired. It argued that the limitation period had already started before the date of the Commission decision, when the Commission issued a press release about its investigation. The Court of Appeal, however, disagreed stating that the press release only contained information about the Commission's intention to start an investigation, which did not imply that the companies being investigated were guilty of anticompetitive behaviour.

Alstom also appealed against the binding evidentiary value of the Commission decision in these civil proceedings. It argued that the District Court had wrongly assumed that the cartel agreements also covered the Meeden-project, as this particular project was not mentioned at all in the Commission decision. In reaching its judgment, the Court of Appeal specifically assessed whether, despite this, it was sufficiently plausible on the basis of the facts of this case that the Meeden-project was covered by the cartel agreements. It concluded that this was the case, because, among other things, (i) the cartel agreements covered the European market; (ii) the participants agreed upon prices and other conditions for submitting a tender; (iii) these agreements related to GIS-installations, like the Meeden-project, and (iv) all parties that subscribed to the tender for the Meeden-project were part of the cartel agreements.

Lastly, Alstom disagreed with the District Court's finding that four different Alstom-entities were liable for the damages. One of these entities, Alstom SA, was only established in September 1992. However, the Commission still held this entity liable for the entire infringement that started before Alstom SA was even established. According to Alstom, this was wrong and the District Court should not have followed the Commission's conclusion. But the Court of Appeal ruled that this argument should be brought before the European courts, which Alstom had, unsuccessfully, done. Since the General Court and Court of Justice had confirmed Alstom SA's liability for the entire duration of the infringement (so even for the part of the infringement that happened before Alstom SA was established), the civil courts must assume that Alstom SA was rightly named as an infringer for this time period.

 

This article was published in the Competition Law Newsletter of December 2018. Other articles in this newsletter:

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