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

07.10.2021 NL law
Commission’s record fine for gun jumping upheld

Short Reads - Pre-closing covenants protecting the target’s value or commercial integrity pending merger clearance from the European Commission must be drafted carefully. The General Court confirmed the Commission’s record-breaking fines on Altice for violating the EU Merger Regulation’s notification and standstill obligations. According to the General Court, the mere possibility of exercising decisive influence over the target can result in a gun jumping breach.

Read more

07.10.2021 NL law
ACM walks the walk: first-ever vertical price coordination fine

Short Reads - The Dutch Competition Authority (“ACM”) has claimed a first victim in its vertical restraints battle. Samsung Electronics was fined nearly EUR 40 million for having meddled in the online resale prices for televisions at seven retailers. Compared to the European Commission’s fines on four consumer electronics producers for resale price maintenance (“RPM”), the ACM’s summary decision seems to refer to a ‘light’ version of RPM: systematic price coordination without any threats, sanctions or incentives for the retailers to stick to the price.

Read more

07.10.2021 NL law
Commission reveals first piece of antitrust sustainability puzzle

Short Reads - The European Commission has published a Policy Brief setting out its preliminary views on how to fit the European Green Deal’s sustainability goals into the EU competition rules. Companies keen to be green may be left in limbo by a looming clash with more far-reaching proposals from national competition authorities. More pieces of the antitrust sustainability puzzle will fall into place as soon as the ongoing review of the guidelines on horizontal cooperation is finalised.

Read more

07.10.2021 NL law
Court of Appeal provides guidance for further course of proceedings in prestressing steel litigation

Short Reads - On 27 July 2021, the Court of Appeal of Den Bosch issued an interim judgment in the Dutch prestressing steel litigation, ruling on three issues: (i) the obligation of claimant to furnish facts; (ii) the assignment of claims; and (iii) the liability of the parent companies. In short, the Court of Appeal allowed the claimant Deutsche Bahn another opportunity to supplement the facts needed to substantiate its claims in the next phase of the proceedings.

Read more

24.09.2021 EU law
Digital Law Up(to)date: (1) the download of a software with a permanent licence can constitute a “sale of goods”; (2) alert of the BEUC regarding the privacy policy of WhatsApp and its new term of use

Articles - In this blog, we briefly present two interesting news in the field of digital law: (1) a judgment of the CJEU considering that the download of a software with a permanent licence can constitute a “sale of goods”, and (2) an alert of the BEUC regarding the privacy policy of WhatsApp and its new terms of use.

Read more