Short Reads

Floodgates open? ECJ allows cartel damage claim for remote economic loss

Floodgates open? ECJ allows cartel damage claim for remote economic l

Floodgates open? ECJ allows cartel damage claim for remote economic loss

09.01.2020 NL law

A mantra of EU competition law is that "any person" can claim full compensation for all the loss caused to him or her through a competition law infringement. In the Otis judgment of 12 December 2019, the ECJ clarified that "any person" is not limited only to market participants such as buyers or suppliers. Persons who suffered a loss as a result of missed investment opportunities must also be able to request compensation.

The judgment thus confirms an earlier ruling of the ECJ in the Kone-case [see our July 2014 Newsletter], in which it was held that national rules which categorically limit the type of persons that can claim cartel damages, are contrary to EU law. This ruling may lead to an increase in claims for pure economic loss against cartel participants.

The EU elevator cartel has led to a flurry of damages claims from buyers, alleging that they overpaid for elevators. Typically, these claimants are public housing agencies and real estate developers. In this case, however, it was the Land Oberösterreich (the "Land"), a public authority in Austria, who claimed damages from the elevator manufacturers. The Land had granted loans on favourable terms (i.e. with a reduced interest rate) to beneficiaries in order to realise social housing projects. The Land alleged that it had suffered loss since the costs connected with the installation of lifts, included in the overall building costs paid by the beneficiaries, had been increased as a result of the cartel. Had the cartel not existed, the Land would have granted smaller loans and would have invested the difference at the average interest rate of federal loans, resulting in a higher return on investment than the loans it granted on favourable terms. The Land claimed a sum corresponding specifically to that loss of interest, plus interest, from the elevator manufacturers.

The national proceedings and the judgment of the ECJ

In first instance, the Commercial Court of Vienna dismissed the claim. It ruled that the alleged loss did not fall within the protective scope of the cartel prohibition, which is a necessary requirement for a successful claim under Austrian law (the concept of the "Schutzzweck der Norm"). In essence, it found that the Land was not active as either a supplier or buyer on the market for lifts, and thus suffered merely indirect loss. Following proceedings before the appellate court, the Supreme Court of Austria submitted preliminary questions to the European Court of Justice about this issue.

In its judgment, the ECJ set out that the full effectiveness of the EU cartel prohibition would be put at risk if it were not open to any individual to claim damages for loss caused to him or her by a competition law infringement. A national rule which restricts this right to solely suppliers and customers of the market affected by the cartel "would from the outset systematically deprive potential victims of the possibility of requesting compensation" and is therefore contrary to EU law. Indeed, a right to full compensation exists for all loss suffered by any person, as long as there is a causal connection between the loss and the competition law infringement. Nevertheless, it is up to the Austrian court to verify (1) whether the Land actually had the possibility of making more profitable investments and, if so, (2) whether the Land has proved the existence of a sufficiently direct causal connection between its alleged loss and the elevator cartel.

Take away

Many civil law systems use concepts similar to the Austrian principle of "Schutzzweck der Norm" to shield tortfeasors from far-reaching liability. Without such norms, it is sometimes argued, defendants will be faced with a flood of claims by an indeterminate class of claimants for indeterminate amounts. In the Otis judgment, the ECJ set aside these concerns in favour of the full effectiveness of EU law. A rule that systematically precludes potential victims “from the outset”, is contrary to EU law. This may lead to an increase in litigation relating to pure economic loss against cartel participants, for example by shareholders.

 

This article was published in the Competition Newsletter of January 2020. Other articles in this newsletter:

Team

Related news

12.05.2020 NL law
Kroniek van het mededingingsrecht

Articles - Wat de gevolgen van de coronacrisis zullen zijn voor de samenleving, de economie en – laat staan – het mededingingsbeleid laat zich op het moment van de totstandkoming van deze kroniek niet voorspellen. Wel stond al vast dat het mededingingsrecht zal worden herijkt op basis van de fundamentele uitdagingen die voortvloeien uit zich ontwikkelende ideeën over het belang van industriepolitiek, klimaatverandering en de positie van tech-ondernemingen en de platforms die zij exploiteren.

Read more

07.05.2020 NL law
Spreading fast: Dutch and Belgian COVID-19 State-aid approved

Short Reads - Many Member States are taking measures to support the economy during the COVID-19 crisis. The European Commission’s Temporary Framework enables the rapid approval of certain types of State aid. So far, three Dutch State aid schemes and six Belgian schemes were approved, providing the beneficiaries with legal certainty that the aid received is in line with EU State aid law and cannot be challenged at a later stage.

Read more

07.05.2020 NL law
ECJ confirms: no shortcut for ‘by object’ antitrust infringements

Short Reads - The European Court of Justice has found there is no shortcut for determining whether particular conduct can be held to have the object to restrict competition. A competition authority will always need to assess carefully whether the conduct reveals "a sufficient degree of harm to competition” before labelling it a ‘by object’ infringement. This is the case where there is sufficiently solid and reliable experience showing that this type of conduct is commonly regarded as being inherently anticompetitive.

Read more

28.04.2020 EU law
Origin of the primary ingredient - Implementing Regulation 2018/775

Short Reads - Since the beginning of this month, the origin of the primary ingredient of a food must be clearly indicated on the product when it differs from the origin given for the product as a whole. This is the result of the implementation of Article 26 (3) of the European Regulation 1169/2011 on the provision of food information to consumers.  

Read more

07.05.2020 NL law
COVID-19: fast-forwarding competition law

Short Reads - Competition authorities are temporarily ‘green-lighting’ certain collaboration initiatives to safeguard the supply of essential products in light of the COVID-19 outbreak. At the same time, authorities warn against using the current exceptional circumstances to engage in anti-competitive practices, such as price-fixing, excessive pricing, refusals to deal or opportunistic takeovers. 

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring