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Comparative analysis between the UK, Dutch and French approach to passing-on in competition cases

Cartel damages litigation is an increasingly hot topic in Europe. For those who are not familiar with this topic a short explanation. Under normal market conditions, enterprises set their own market prices for their products. Under cartelized conditions, however there is some form of concerted practice (either explicit or tacit) which could lead to an agreement on prices for instance. If competitors agree on a price, this will normally lead to higher prices than under normal circumstances. Competition law prevents competitors this kind of behavior, setting high penalties (potentially in the billions of Euros for world-wide players) when trespassers on the EU competition laws are caught. However, these penalties, severe as they might appear, nevertheless pale into insignificance compared to civil damages claims. The gap between the normal market price and the artificial cartelized price is the so-called cartel damage. In addition, to give you an idea of the enormity of these kind of damages we give as an example the trucks case. Six truck companies were caught red handed by the European Commission in a cartel that lasted (at least) from 1997 to 2011. They were fined 3.8 billion euros. However, estimates are that the total of cartel damages amount to a staggering figure of 200 billion euros. These stakes are high enough to ensure massive court battles. The defendants have no other option than to put forward any possible or impossible argument to prevent the court from a decision that might cause their bankruptcy. For the claimants on the other side it is inevitable to go to court, since their losses have been so high.

Therefore, when stakes are as high as they are, there is no other option than to be very thorough in all the arguments and defenses that are brought to the court. Let alone to be meticulous in the first place as where to litigate.

Several legal topics have drawn special attention over the last few years. In this series of articles, we will shed light on the most hotly debated. Today we discuss the passing on defense. We made a comparative analysis between the Netherlands, France and the United Kingdom. The Netherlands and England (along with Germany) are considered mature jurisdictions in cartel damages litigation, while France (along Spain and Portugal for instance) are on the move to join this lawyer’s paradise.

Passing-on

“Passing-on” in competition cases is where overcharges caused by a cartel, which affect the customers of the cartelists (direct purchasers), are passed-on by these purchasers to buyers further down the supply chain (indirect purchasers). The pass-on argument as a defense may be invoked by a cartel member as a (partial) shield against a claim for damages and by an indirect purchaser as a sword to support the argument that it has suffered damages and/or to evidence cartel collusion.

Legal background

The passing on defence is valid under both EU and national laws.

The Damages Directive[1] (and implementation laws in the Member States) has set two important presumptions reversing the burden of proof:

– as far as direct purchasers are concerned, it is presumed that they have not passed the overcharge on to their own customers. Thus, it is up to the defendant in the antitrust action for damages to prove that the overcharge has indeed been passed on and that its direct purchasers have not suffered any (or less) damage (Article 13 Damages Directive);

– concerning the indirect purchasers, it is presumed that their supplier has passed on the overcharge. Therefore, the burden of proof is here again placed on the defendant in the action for antitrust damages (Article 14 Damages Directive).

Those in itself contradictory presumptions could potentially apply to all claims. The presumptions in itself apparently are designed to help the (potential) claimants in a case.  Everyone familiar with civil litigation knows that a sentiment of wrongdoing is not the same as proving you were wronged. Therefore, it is extremely important to have the burden of proof shifted to the wrongdoers.  In that regard, national courts have established a common understanding for the enforcement of the passing on defence it is for the defendants to prove passing on and the extent thereof as well as the absence of volume effects.  This outcome is consistent with the acquis communautaire on the burden of proving pass-on (i.e. in line with the EU principle of effectiveness) that has been codified in Article 13 Damages Directive. So how do courts apply these presumptions in practice in their case law? We believe that this would lead to the conclusion that the odds should favour the claimants. However, do courts indeed apply this presumption? We compared the United Kingdom, the Netherlands andFrance.

United Kingdom approach

In two recent landmark cases the UK Supreme Court (SC) and the UK High court rendered decisions on the UK evidential standard in connection to the passing on defense. The Courts emphasized that claimants should be neither undercompensated nor overcompensated and therefore the evidential burden in relation to mitigation of loss on defendants / cartel members should not be ‘unreasonably high’. This is an approach in which no apparent choice seems to be made in favor of the claimants or the defendants.

In June 2020, the SC overturned a decision of the Court of Appeal in which it had decided that it required defendants (cartel members) to prove the (virtually) exact amount of loss mitigated in order to reduce claimed damages.[2] The SC decided that the law does not require such high evidential standard and that the Court of Appeal had erred insofar that it required ‘unreasonable precision’ from the defendants in the proof of the amount of loss that the claimants had passed on to end customers. This decision was rendered in the context of a damages lawsuit brought by several supermarkets against Mastercard, Visa and several other large banks for the use of certain payment card schemes, in particular the multilateral interchange fees (MIFs)[3] applicable in the EEA, which the European Commission found to be anti-competitive in 2007.

Key considerations of the SC regarding the evidential burden of defendants:

  • Claimants should not be under-compensated but neither overcompensated when suffering harm from a competition law breach.
  • In the UK, pass-on is an element in the quantification of damages that is required by the compensatory principle and required to prevent double recovery through claims in respect of the same overcharge by a direct purchaser and by subsequent purchasers in a chain. Against this background, the SC considered that “justice is not achieved if a claimants receives less or more than its actual loss”. (217)
  • A balance is required between the compensatory principle and the principle that disputes should be dealt with ‘at a proportionate cost’. In that light “the court and the parties may have to forego precision, even where it is possible, if the cost of achieving that precision is disproportionate, and rely on estimates”. (217).
  • The SC considered that it sees no reason why in assessing compensatory damages there should be a requirement of greater precision in the quantification of the amount of an overcharge which has been passed on to end consumers because there is a legal burden on defendants in relation to mitigation of loss. (219).

The preceding approach does not offend the principle of effectiveness of EU Law, according to the SC:

“As we have said, the relevant requirement of EU law is the principle of effectiveness. The assessment of damages based on the compensatory principle does not offend the principle of effectiveness provided that the court does not require unreasonable precision from the claimant. On the contrary, the Damages Directive is based on the compensatory principle.” (220)

“ As the regime is based in the compensatory principle and envisages claims by direct and indirect purchasers in a chain of supply it is logical that the power to estimate the effects of passing-on applies equally when pass-on is used as a sword by a claimant or as a shield by a defendant.” (224)

On 25 February 2021, the UK High Court rendered a decision in which it validated the approach to pass-on of the SC decision of June 2020.[4] The UK High court referred to several key considerations of the SC in its decision, among which the compensatory principle and the fact that claimants should not be overcompensated for their damages as much as they should not be undercompensated. In addition, the decision implies that the pass-on approach can / should also be applied in complex and a-typical cases of passing on of overcharges, as the underlying case, which would pose a difficult and costly evidential burden on both parties.

This case stems from the foreign exchange cartel and a damages lawsuit filed by Allianz Global Investors and other claimants against several banking groups for their participation in the aforementioned cartel. The case involves investment funds who seek to generate a return for their investors and in so doing make use of the foreign exchange services provided by banks. Pass-on in this case is said to occur when an investor redeems or withdraws his investment from the fund. The High Court made clear that even though this is not a typical pass-on case involving the sale and purchase of goods in a supply chain, the compensatory principle equally applies. Defendants should not be subject to double recovery (12).

Claimants argued that the defendants’ pass-on defense should be stricken out because there was no real prospect of success, mainly because investors would have no cause of action against the banks. They also argued that it would have great impact on the future scope of claims, in terms of disclosure of documents and provision of evidence. The UK High Court did not agree that there would be no real prospect of success. The UK High Court said that the defense was appropriate and therefore it considered it necessary to “investigate precisely how the alleged wrongdoing of the Defendants impacted upon the investment fund (…) and how that affected the sum payable to the investor”, by disclosure and by factual and perhaps expert evidence. The pass-on defense could therefore be advanced to trial.

Our preliminary conclusion is that the UK courts do not favor one party over the other. It seems as if the courts feel that over-compensation is just as bad as under-compensation. In addition, in this argument there seems to be a deviation from the choice for the principle of effectiveness. So how do the Dutch approach this?

The Dutch approach

In Dutch case law the threshold for an effective passing-on defense has been set relatively high, contrary to the standard that has been set in the UK. The principle of effectiveness and the scope of the Cartel Damages Directive have served as normative and guiding principles for Dutch courts in this regard. The landmark judgements stem from a follow-on damages case between electricity transmission operator TenneT and electricity equipment corporation ABB.

On 8 July 2016, the Supreme Court ruled in the cartel damages case between ABB and TenneT that ABB was liable for the damage suffered by TenneT through the cartel on the market of gas-insulated switchgear.[5]

Amongst others, the Dutch Supreme Court considered in this case that even without retroactive effect for material law, the Damages Directive nevertheless has to be taken into account in order to sure the European l’effet utile and the principle of equality (4.3.1 and 4.3.4). In other words, it was clear that the Damages Directive was not applicable in this case but the Supreme Court did consider it. With reference to article 12 (3) of the Damages Directive, the Supreme Court decided that the evidential burden in connection to passing on is in principle on the cartel member. Furthermore, the Supreme Court confirmed that the court is authorized to estimate damages if it is not possible to determine the amount of damages precisely. So with reference to the not applicable Damages Directive the Supreme Court clearly decided in favor of the claimant.

The District Court of Gelderland delivered judgment on 29 March 2017 and ABB was ordered to pay € 23 million in compensation for the damage caused by the cartel.[6] ABB argued against the extent of the damage by invoking the passing-on defense. The District Court did not agree with this and found that the question whether this defence is reasonable, the principle of equality, the principle of effectiveness and the scope of the Damages Directive serve as normative and guiding principles (4.17). The court considered that “the object of the Damages Directive is not that the infringer should be given a hook to get out his liability of damages. The intention is that the compensation to be paid by the infringer should accrue to the direct and indirect customers in the chain to whom the additional costs were charged” (4.18). The court also ruled that the chance of end consumers bringing their own damages actions (and thus the risk of double compensation) was negligible. Once again and even clearer than the Supreme Court the court here argued in favor of the claimant, especially because they took into account the possibility of actual passing on, but that it was unlikely that further down the line any consumer would collect these scattered damages.

The so-called efficiency defense has been paid particular attention to in this context. Nowadays, almost every claimant advances this defence. Parties claim the harm suffered and alternatively claim compensation by invoking the efficiency defence. Briefly stated, the efficiency defence results in the court nevertheless awarding compensation to the claimant even if strictly speaking, the claimant is unable to prove the harm. This is of course a slippery slope from the point of view of legal certainty. However, it does seem to follow the European starting position, which is that the process should not be made too difficult for claimants and which forms the basis for the Damages Directive.It is a means of ensuring that private litigation is not made impossible from the very start.

The French approach

In France, in cases in which Pre-Damages Directive rules apply, the question of the burden of proof regarding the passing on defense is not entirely settled yet.

According to the Circular of 23 March 2017, the new Article L481-4 of the French Commercial Code (including burden of proving passing on) does not apply to damages claims resulting from an infringement, which took place before its entry into force, that is on 11 March 2017.

Prior to the adoption on 9 March 2017 of the rules implementing the Damages Directive in France, there was no specific legal provision on the issue of pass-on of overcharge in cartel damages cases. The general civil law provisions, namely Art, governed the issue. 1315 of Old French Civil Code (Art. 1353 of the New French Civil Code with the exact same wording).

In accordance with  a ruling of the Cour de cassation[7], several French civil and commercial courts of first instance have handed down judgments putting the burden on the claimant to prove the absence of passing on.[8] While in two cases the Paris Court of Appeal considered that it was for the defendant to prove the passing on after the plaintiff had brought some indicia showing that there was no passing-on[9], it recently quashed a ruling of the first instance court where it found that the plaintiff which had been granted damages had not provided any evidence that there had not been any passing on.[10] Most recently however, the Paris Administrative Court of Appeal[11] and the French Court of Cassation[12] held that, in accordance with EU law and principles, the burden of proof regarding the passing on of the illegal overcharge lies with the defendant. Besides the economic aspects (additional damages in form of loss of profit and the difficult proof of causality), there are therefore strong legal arguments to counter any potential passing-on defence. As the case law stands, it therefore seems highly recommendable to the plaintiffs that they bring as much evidence as possible about the absence of passing-on, allowing then the French Courts to shift the burden of proof on the defendant to establish passing-on.

Therefore, overall it appears that the French courts are slowly marching away from Albion to get closer to the Dutch approach regarding cases in which Pre-Damages Directive rules apply.

On the other hand, with regards to cases where post-Damages Directive rules apply, there is no doubt that the plaintiffs will fully benefit from the presumptions set by the Damages Directive.

Next time we discuss the bundling of claims!

bureau Brandeis, 4 June 2021

Marc Barennes, Tessel Bossen, Hans Bousie & Sarah Subremon

 

[1] Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union Text with EEA relevance (OJ L 349, 5.12.2014, p. 1–19)

[2] UK Supreme Court 17 June 2020, case references UKSC 2018/0156 Sainsbury’s Supermarkets Ltd and others (Respondents) v MasterCard Incorporated and others (Appellants); UKSC 2018/015 Sainsbury’s Supermarkets Ltd (Respondent) v Visa Europe Services LLC and others (Appellants).

[3] MIFs are charged by a cardholder’s bank (issuer) to a merchant’s bank (the acquirer) for each transaction made to the merchant with a payment card. In practice, the acquiring banks passed these fees on to merchants by charging a merchant services charge (MSC), for which they were seeking damages. The banks however argued that the supermarkets had passed-on the overcharges by the MIFs/MSCs to their end consumers by raising retail prices.

[4] UK High Court 25 February 2021, Case no CL-2018000840.

[5] Supreme Court 8 July 2016, ECLI:NL:HR:2016:1483.

[6] District court of Gelderland 29 March 2017, ECLI:NL:RBGEL:2017:1724.

[7] Cour de cassation, 15 May 2012, Le Gouessant.

[8] Paris Commercial Court, 26 March 2018, Provera; Paris Commercial Court, 20 February 2020, Cora; Rennes High First Instance Court, 7 October 2019, FRSEA.

[9] Paris Court of Appeal, 20 September 2017, JCB; Paris Court of Appeal, 6 February 2019, Doux.

[10] Paris Court of Appeal, 14 April 2021, Johnson & Johnson.

[11] Paris Administrative Court of Appeal, 13 June 2019, SNCF Mobilités.

[12] French Court of Cassation, 12 February 2020, Collectes valorisation énergie déchets. This case does not relate to antitrust damages and may only be referred to by analogy.

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Cartel Damages Litigation – Quarterly Report III of 2020

This is the second bureau Brandeis quarterly report of 2020 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel Damages Litigation – Quarterly Report II of 2020

This is the second bureau Brandeis quarterly report of 2020 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel Damages Litigation – Quarterly Report I of 2020

This is the first bureau Brandeis quarterly report of 2020 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Breaking News: Visa en Mastercard face billions of pounds damages claims in the UK

The so-called interchange fees set by Visa and Mastercard that have to paid by retailers on all card purchases are illegal, the UK Supreme Court said on Wednesday.[1] This means that Visa and Mastercard will now definitely be faced with potential billion pound follow-on damages claims from merchants.

Whenever a customer uses a credit/debit card to make a purchase in a store, the merchant´s bank account must pay a transaction fee to the card-issuing bank of the customer.  These fees are called multilateral interchange fees (MIF). The UK Supreme Court said Wednesday that the MIFs charged within the Visa and Mastercard payment card schemes are illegal.

This decision has major implications for Visa and Mastercard, because numerous damages claims have already been initiated by merchants in the UK and now it is clear that all these procedures can proceed to a trial to decide compensation. According to the lead counsel of J Sainsbury, the potential damages could amount to a billion pounds.

In July 2018, the high court decided already that the interchange fees of the companies were restricting competition and breached UK and European competition rules.[2] This decision has (for the most part) been confirmed by the decision of the Supreme Court.

The Supreme Court confirmed i.a. that Visa and Mastercard had to meet a more onerous evidential standard than that normally applicable in civil litigation with regard to proving that the interchange fee model should be exempt from European competition rules. One of the conditions in order to qualify for an exemption is that the efficiencies and benefits for the consumers (here: the merchants) outweigh the disadvantages they have to bear as a result of the restriction of competition. The Supreme Court said that the adverse effects should be outweighed by the benefits for (in this case) the merchants in so far that they would be fully compensated for the disadvantages. Visa and Mastercard did not succeed in proving that the merchants benefitted of the interchange fee model to that extent.

The procedures stem from a decision of the European Commission of 2007.[3] In that decision, the Commission found that the interchange fees of Mastercard were illegally high for 15 years. The Commission did however not decide whether the interchange fee as such would be illegal. The decision of the UK Supreme Court clarifies that this is the case.

We reported on these proceedings and their background in multiple editions of our Cartel Damages Litigation Quarterly Report in Q (2018-QI, Q3 and 4, and 2017-Q2, Q3 and Q4).

[1] UK Supreme Court 17 June 2020, [2020] UKSC 24.

[2]  Court of Appeal 4 July 2018, 2018 EWCA Civ 1536.

[3]  European Commission decision of 19 December 2007, case COMP/34.579 (Mastercard).

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Cartel Damages Litigation – Quarterly Report IV of 2019

This is the fourth bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Breaking news in cartel damages litigation

Yesterday[1] the court of appeal in Amsterdam, the Netherlands, overturned an earlier decision[2] of the lower Amsterdam court in the so-called Sodium chlorate case. The lower court ruled earlier that the limitation period has run out according to several national regulations a.o. Spanish and Swedish law. Until now it was widely accepted in the European Union that limitation periods start running at the moment the European Commission renders its decision. In its ground breaking decision, the appellate court though ruled, referring to the so called Cocego case (see below) that the limitation period connected to follow-on proceedings only starts running after the complete appellate term has run, so ultimately at the moment of the final ruling of the Court of Justice of the European Union (CJEU). Thus extending possible limitation periods with years. The appellate court explicitly refers to the principle of effectiveness of private litigation in cartel damages cases.

In Europe, cartel damages litigation is picking up speed. Other than in the US where this kind of litigation has been practised for decades, in Europe it all started 16 years ago with the introduction of Regulation 1/2003[3] by the European Commission and three years later with the landmark judgment in the Manfredi case[4]. In Manfredi, the CJEU summarized its preceding case law and held that, once an infringement of Article 81 EC[5] has been committed, any individual should be able to rely on the invalidity of an agreement or practice prohibited under that article. In the Manfredi case, Vincenzo Manfredi, an Italian national, started national private damages litigation against a number of insurers who agreed to a concerted practice of raising their premiums, which was held to be an infringement of national competition law. The Manfredi case has proven to be a cornerstone under the theory and practice of private damages litigation by introducing the principle of effectiveness (Effet Util) into cartel damages litigation[6]. The direct effect principle ensures the application and effectiveness of European law in EU countries and this principle has been extended recently.

In 2019 the CJEU held in the so called Skanska case[7] that companies, interpreted as an economic unit, are liable for the damage caused by the cartel. This is also the case when it changes its identity through restructurings, sales or other legal or organisational changes.

The ECJ ruled:

“As stated in paragraph 25 of this judgment, the right to claim compensation for damage caused by an agreement or conduct prohibited by Article 101 TFEU ensures the full effectiveness of that article and, in particular, the effectiveness of the prohibition laid down in paragraph 1 thereof.”[8]

Therefore, if the undertakings responsible for damage caused by an infringement of the EU competition rules could escape penalties by simply changing their identity through restructurings, sales or other legal or organisational changes, the objective of suppressing conduct that infringes the competition rules and preventing its reoccurrence by means of deterrent penalties would be jeopardised.”[9]

The Dutch courts were eager to accept this principle of effectiveness. The Dutch Supreme Court[10] first held that according to EU law, anyone must be able to claim compensation for the damage caused to them by an agreement or conduct which is capable of restricting or distorting competition, and that would not preclude national courts from ensuring that the protection of rights guaranteed under the legal order does not result in an unjustified enrichment of the beneficiaries (referring to the Courage and Crehan cases).[11]

The determination of damages by the Dutch court takes place in the absence of EU law under Dutch law, with due regard for the principle of equivalence and the principle of full effectiveness. The Supreme Court then considered whether the private damages directive (‘Directive’) was applicable in this case, which clearly it was not, since the infringement referred to the Supreme Court took place long before the introduction of the Directive and the preamble of the Directive even states explicitly that the Directive has no retroactive effect. Nevertheless the Supreme Court (quite remarkably) held that, despite the non-applicability of the Directive, Dutch law has to be interpreted in such a way that the outcome of a case should not be contrary to the Directive.

So the Amsterdam appellate court, follows suit, referring to the Cogeco case[12] in which the CJEU held that the principle of effectiveness can set aside national limitation periods.

The CJEU ruled:

Accordingly, the rules applicable to actions for safeguarding rights which individuals derive from the direct effect of EU law must not be less favourable than those governing similar domestic actions (principle of equivalence) and must not make it in practice impossible or excessively difficult to exercise rights conferred by EU law (principle of effectiveness).”[13]

This Dutch judgment is surely welcomed by plaintiffs litigating in the Netherlands, and of course can have a great impact on the position of defendants. Not only will it possibly influence current cartel damages litigation in the Netherlands, but if the Dutch Supreme Court will uphold this ruling, this could have an immense impact on the strategy of defendants. In the near future defendants might be forced to decide to decline appealing a European Commission decision because together with the appeal they might prolong the limitation period to the benefit of anyone claiming damages connected to this specific cartel.

Hans Bousie

On behalf of the cartel damages team of bureau Brandeis, 5 February 2020

 

 

[1] Amsterdam court of Appeal CDC-Kemira, 4 February 2020.

[2] Amsterdam court, CDC-Kemira 10 May 2017.

[3] Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty.

[4] CJEU, Vincenzo Manfredo vs Lloyd Adriatico Assicurazion1 (C—295/04) 13 July 2006.

[5] 101 TFEU.

[6] The direct effect of European law has been enshrined by the CJEU in the judgement of Van Gend en Loos of 5 February 1963. In this judgement, the Court held that European law not only engenders obligations for EU countries, but also rights for individuals. Individuals may therefore take advantage of these rights and directly invoke European acts before national and European courts.

[7] Court of Justice, 14 March 2019, C-724/17.

[8] Court of Justice, 14 March 2019, C-724/17, p. 43.

[9] See, by analogy, judgment of 11 December 2007, ETI and Others, C‑280/06, EU:C:2007:775, paragraph 41 and the case-law cited).

[10] Tennet ABB, Dutch Supreme Court, 8 July 2016, ECLI:NL:HR:2016:1483, p. 4.3.1.

[11] (CJEU 20 September 2001, C-453/99, ECLI:EU:C:2001:465, NJ 2002/43, p. 26 and 30 (Courage and Crehan))

[12] Court of Justice, 28 March 2019, C-637/17

[13] judgment of 5 June 2014, Kone and Others, C‑557/12, EU:C:2014:1317, paragraph 25

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Cartel Damages Litigation – Quarterly Report III of 2019

This is the third bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel Damages Litigation – Quarterly Report II of 2019

This is the second bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel Damages Litigation – Quarterly Report I of 2019

This is the first bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel Damages Litigation – Quarterly Report I of 2019

This is the first bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

Would you like to receive the next edition of our quarterly report by email? Please subscribe to our mailinglist by filling in this form or sending us an email through this link.

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Cartel Damages Litigation – Quartely Report II

This is the second bureau Brandeis quarterly report of 2018 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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bB publishes in GLI: Cartels 2019

Recently, the Global Legal Insights to Cartels 2019 was published. Hans Bousie, Louis Berger en Rieneke Reijnen wrote the chapter on cartel damages litigation in the Netherlands. The authors discuss the advantages of litigation before the Dutch courts in this type of mass damages cases, in light of recent Dutch case law regarding class actions. The whole chapter is available here.

 

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Cartel Damages Litigation – Quarterly Report I

This is the first bureau Brandeis quarterly report of 2018 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel damages litigation – quarterly report IV

This is the fourth bureau Brandeis quarterly report of 2017 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel damages litigation – quarterly report III

This is the third bureau Brandeis quarterly report of 2017 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel damages litigation – quarterly report II

This is the second bureau Brandeis quarterly report of 2017 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Scania fined by EC

Scania, one of the six large truck manufacturers was fined by the European Commission today, 27 September 2017, for € 880 million for participating in the so called trucks cartel. Earlier, on 19 July 2016, the other five participants in the same cartel were fined as well after reaching a settlement with the European Commission. Because of their participation in the investigation of the European Commission the other truck manufacturers, Daimler, DAF, Iveco, Volvo/Renault and MAN received discounts under the leniency notice and the settlement notice on their fines. MAN as the whistle blower even received a 100% reduction. With todays fine added to it, the European Commission sets a record fine of a staggering 3.8 billion Euros.

Because the other five truck manufacturers have reached a settlement with the Commission, their case is closed, meaning no appeals are pending. Because Scania did not cooperate with the Commission, it took more than a year extra to complete the case against Scania. Scania was found guilty of fixing the prices of trucks and colluding on passing on the costs of new technologies to meet stricter emission rules.

The Commission in its press release expresses her relieve on ending her investigation in this especially long lasting cartel (over fourteen years), covering over 90% of all truck sales in Europe in the period of 1997 until 2011.

That Scania did not cooperate with the Commission has a threefold effect. In the first place the decision of the Commission against Scania is open for appeal, and we are pretty sure Scania is about to appeal the decision. In the second place since Scania did not comply, her fine was not reduced, neither under the leniency nor under the settlement notice, thus resulting in this massive fine of

€ 880 Million, only topped by the fine of over 1 Billion Euros by Daimler and that was even after a 40% reduction.

In the third and not in the last place, the effect on follow on damages litigation. Over the last five years, there has been a steep rise in damages litigation following cartel decisions by the European Commission. These so called follow on cases can lean on tow presumptions. The first being that the Case law of the Court of Justice and Council Regulation 1/2003 confirm that in cases for national courts, a Commission decision constitutes binding proof that the behavior took place and was illegal. In the second place following the so called Cartel Damages Directive cartels are supposed to cause harm and thereby result in the obligation to pay damages.

So for all six manufacturers there is this binding decision. But Scania still has a chance to escape, she alone can and will appeal the decision against her. Nevertheless follow on cases have already been filed in Ireland, Germany and the Netherlands already and there are more to come. The truck manufacturers are up for another battle.

Hans Bousie

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Cartel damages litigation – quarterly report I 2017

This is the first bureau Brandeis quarterly report of 2017 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Cartel damages litigation – quarterly report IV

This is the fourth bureau Brandeis quarterly report on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Vision

Cartel damages litigation – quarterly report III

This is the third bureau Brandeis quarterly report on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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Vision

Cartel damages litigation – quarterly report II

This is the second bureau Brandeis quarterly report on the developments in the area of cartel damage litigation. In this summary we concentrate on follow-on and stand-alone cases in relation to cartel damage cases as well as damage caused by abuse of a dominant position in the market.

We focus on Europe and the United States. Within Europe, the Netherlands, the UK and Germany are the jurisdictions where most cases take place and they therefor receive the most attention. We only touch on developments outside Europe and the United States if we deem them to be relevant. For example, in this Quarterly we will discuss an Israeli case (p. 7) as it provides a relevant insight in European case-law.

On the other hand, we mention the case of South Africa’s Supreme Court of Appeal under ‘Private enforcement in cartel damages claims, case-law’ to show that leniency rules are not applied in the same way everywhere in the world. In Europe, parties that use the leniency programme are not immune from follow-on claims, which apparently is the case in South Africa. This is a discussion that is currently also taking place in Europe. The use of the leniency programme is very important for the Commission’s policy as it increases the ability to round up cartels. On the other hand, cartel participants have noticed that this may make them more vulnerable to follow-on claims, which significantly reduces their enthusiasm to use such programmes.

South Africa also shows up in another way. At ‘Developments regarding public law aspects of cartel damages’ we see that President Zuma has promulgated legislation to facilitate the enforcement of the competition legislation. This legislation has introduced the possibility to give de facto persons in charge prison sentences of as much as 10 years.

We trust that this summary is of use to you. We would welcome any additions to or comments on this message.

You may download our quarterly report here.

Vision

Cartel damages litigation – quarterly report I

This is the first bureau Brandeis quarterly report on the developments in the area of cartel damage litigation. You may download our quarterly report here.

Would you like to receive the next edition of our quarterly report by email? Please subscribe to our mailinglist by sending us an email through this link.

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