Out-Law News | 06 Jun 2014 | 11:55 am | 2 min. read
The Court of Justice of the EU (CJEU) said that competition rules that apply in the trading bloc prohibit member states from preventing businesses from claiming such losses from cartel members.
"[Competition rules under article 101 of the Treaty on the Functioning of the EU] ... precludes the interpretation and application of domestic legislation enacted by a member state which categorically excludes, for legal reasons, any civil liability of undertakings belonging to a cartel for loss resulting from the fact that an undertaking not party to the cartel, having regard to the practices of the cartel, set its prices higher than would otherwise have been expected under competitive conditions," the CJEU said in a new ruling.
The CJEU was ruling in a case referred to it from Austria where a subsidiary of Austrian Federal Railways, ÖBB-Infrastruktur, is claiming €1 839 239.74 in compensation from some companies which were previously found to have participated in a cartel in the market for elevators and escalators.
ÖBB-Infrastruktur has argued that it is due the compensation as it paid its suppliers of elevators and escalators, which did not participate in the cartel, a higher price than they would have done so under ordinary competitive conditions as a result of the cartel's activities elsewhere in the market.
"Market price is one of the main factors taken into consideration by an undertaking when it determines the price at which it will offer its goods or services," the CJEU said. "Where a cartel manages to maintain artificially high prices for particular goods and certain conditions are met, relating, in particular, to the nature of the goods or to the size of the market covered by that cartel, it cannot be ruled out that a competing undertaking, outside the cartel in question, might choose to set the price of its offer at an amount higher than it would have chosen under normal conditions of competition, that is, in the absence of that cartel."
"In such a situation, even if the determination of an offer price is regarded as a purely autonomous decision, taken by the undertaking not party to a cartel, it must none the less be stated that such a decision has been able to be taken by reference to a market price distorted by that cartel and, as a result, contrary to the competition rules," it said.
Cartel members "cannot disregard" the fact that 'umbrella pricing' across their market is a possible effect of their unlawful activities and that it can cause businesses to suffer losses they otherwise would have not, the CJEU said.
Competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said that the ruling extended principles established by existing case law.
"The interesting question is whether, on the facts of an individual case, it can be proven that a cartel has led to the market-price as a whole being increased and whether that has caused loss for an individual claimant," Lougher said. "The concept of 'presumption of loss' in the EU Directive on damages actions which has been recently adopted by the European Parliament will help in this case, but English courts are still going to require evidence of causation and quantum."
"The case also highlights the potential magnitude of the financial risk faced by any member of a cartel; they are liable for the financial loss caused to any customer of all the co-cartelists and, as this case affirms, to any purchaser who has suffered loss as a result of the cartel’s actions, even if they were not a customer of the cartel members," he said.
"It means that more competition damages actions may be brought, the financial size of those claims may continue to increase, and it may become even more time-consuming and complex to settle the cases. But perhaps it also increases the likelihood of a competition damages action ultimately leading to some sort of payout for the claimant," Lougher said.