The Dutch Authority for Consumers and Markets (ACM) needs to cough up a total of EUR 120,000 in moral damages to three real estate traders. The Dutch Trade and Industry Appeal Tribunal (CBb) agreed with the real estate traders that the annulment of the ACM's cartel decisions against them was insufficient compensation for the harm they suffered as a result of the length of the procedure and the press coverage of their cases.
Even though the ACM is no stranger to paying up, with a record payment of EUR 4.5 million for a wrongfully blocked bakery merger in 2017, having to only pay moral damages seems exceptional. It is, however, another factor companies and individuals can take into account when considering their actions if faced with an annulled ACM decision.
The ACM's causality defence
The ACM had argued that all claims should be dismissed because, despite the CBb's annulment of its fining decisions in 2017, the ACM could legitimately have adopted valid infringement decisions which would then, ex hypothesi, have caused the same alleged damage. As a result, there was no causal link between the annulled decisions and the alleged damage. The CBb ruled, however, that ACM had not furnished sufficient evidence to support its statement that it could legitimately have adopted a fining decision vis-à-vis the traders.
The traders' claims for lost profits
The traders argued they should be compensated for lost profits. The infringement decisions against them – which were eventually ruled to be unlawful – had made it more difficult and costly for them to attract funding. This was mainly caused by their bank revoking its loan facility when it discovered they were under investigation by the ACM. As a result, the traders were no longer able to carry out their business. However, the CBb made short shrift of this argument, ruling that the bank's decision could not be attributed to the ACM, as the bank's reason for revoking the loan facility was not dependent on the validity of the annulled infringement decision.
The trader's claim for moral damages
The traders also argued that the press coverage of their cases – which was allegedly partly instigated by the ACM – had damaged their reputation. The CBb agreed. It ruled that the mere fact that the infringement decision was annulled was, given the circumstances of the case and the length of the proceedings, an insufficient remedy. It therefore ordered the ACM to pay each trader EUR 40,000 in moral damages. The traders' argument that the investigation had also harmed their health was dismissed for lack of evidence.
The judgment shows that companies or individuals who have been confronted with an unlawful fine may have a claim for moral damages. However, a decisive factor in this case may have been that the investigated traders carried out their businesses in a personal capacity. Large companies may have a harder time substantiating a claim for moral damages in similar circumstances. Even so, it is another factor to reckon with if faced with an annulled ACM decision.
This article was published in the Competition Newsletter of October 2019. Other articles in this newsletter: