5 May 2021 European Court of Justice Case Law on the

EJTN Training on “Jurisprudence Updates: Most important decisions of the European Court of Justice”

5th May 2021

European Court of Justice Case Law on the Damages Directive

Assoc. prof. Vlatka Butorac MalnarUniversity of Rijeka, Faculty of Law

Croatia

With financial support from the Justice

Programme of the European Union

Antitrust damages directive

Antitrust damages directive of 26/11/2014; implemented by 26/ 12/ 2016.

Right to full compensation; limitation periods; joint and several liability; quantification of harm; passing on of overcharges; standing; Disclosure of evidence; Effect of national decisions; Consensual dispute resolution in antitrust enforcement

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INTRODUCTION:Cases prior to the DirectiveSubstantive issues

• Case C-453/99, Courage and Crehan, ECLI:EU:C:2001:465 (right to full compensation)

• C-295/04 to C-298/04, Manfredi,ECLI:EU:C:2006:461 (right to full comepensation, compensable damages: actual loss (damnum emergens) but also for loss of profit (lucrum cessans) plus interest.)

• C-557/12, Kone AG, ECLI:EU:C:2014:1317 (umbrella claims)

Procedural issues

• C-360/09 Pfleiderer ECLI:EU:C:2011:389 (access to file of the competition authority - leniency)

• C-536/11 Donau Chemie ECLI:EU:C:2013:366 (access to file of the competition authority)

• C- 365/12 EnBW ECLI:EU:C:2014:112 (access to file of the EC on the ground of the Transparency Regulation 1049/2001)

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Cases on procedural issues

International jurisdiction: Brussels I recast Regulation• C-352/13 CDC Hydrogen peroxide EU:C:2015:335;

• C-27/17 flyLAL- Lithuanian Airlines EU:C:2018:533;

• C-595/17 Apple Sales International EU:C:2018:854;

• C-451/18 Tibor Trans EU:C:2019:635;

• C-30/20 (pending)• AG Opinion delivered 22/04/2021

• Temporal application of the Directive• C-637/17, Cogeco Communications Inc., ECLI:EU:C:2019:263

• Probative value of the Commission commitment decision• C-547/16 - Gasorba and Others EU:C:2017:891 (interpretation of

regulation 1/2003)


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Cases on substantive issues

• C-724/17, Skanska Industrial Solutions Oy, ECLI:EU:C:2019:204

• C-435/18, Otis GmbH, ECLI:EU:C:2019:1069.

Pending cases:• C-882/19- Sumal (economic unity - liability of subsidiary for parent)

• AG Opinion delivered 21.04.2021

• C-30/20 - Volvo and Others ( int’l jurisdiction)• AG Opinion delivered 22.04.2021.

• C-267/20 - Volvo and DAF Trucks (art 10, 17 and 22 of the Directive)

• C-57/21 – RegioJet (disclosure, access od file art. 5 and 6 of the Directive)

• C-163/21- PACCAR not reported yet (evidence)

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C-724/17, Skanska Industrial Solutions Oy, ECLI:EU:C:2019:204

• 1994 – 2002 = asphalt cartel in Finland

• 2004 decision by the Finnish NCA against 7 companies (approved by the Supreme administrative court in 2009)

In the meantime…restructuring of the addressees of the decision (all the shares of the companies which have participated in a cartel were acquired by other companies, which dissolved the former companies and carried on their commercial activities)

City of Vantaa initiates antitrust damages proceedings against Skanska and others (restructured companies).

Legal question: May the acquiring companies be held liable for the damage caused by the cartel?


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Skanska

District court: awarded damages

“ in order to ensure the effectiveness of Article 101 TFEU, the economic continuity test must be applied to the determination of liability for damage in the same way as that for the imposition of fines.”

Court of appeal: dismissed the claim

“the principle of effectiveness cannot call into question the fundamental characteristics of the Finnish rules on civil liability and that the economic continuity test applied in relation to the imposition of fines cannot be applied to actions for damages in the absence of detailed rules or more specific provisions.”


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Skanska

Supreme court: request for preliminary ruling

“Finnish law is based on the principle that onlythe legal entity that caused the damage is liable… Inthe case of legal persons, it is possible to derogatefrom this basic rule by lifting the corporate veil.However, that approach is only possible if theoperators concerned used

the group structure, the relationship between thecompanies or the shareholder’s control

in a reprehensible or artificial manner, resulting inthe avoidance of legal liability.”


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Skanska

Supreme court: request for preliminary ruling

• Is the determination of which parties are liable for civil damages caused by an infringement of Article 101 TFEU a question of EU or national law?

• Are the same principles applicable to determining the entities liable in cases concerning fines and damages, including the notion of economic unit and economic continuity?

• Are the restrictive national conditions on piercing the corporate vail contrary to the EU principle of effectiveness?


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Skanska

CJEU:

• recalled the horizontal direct effect of arts 101(1) and 102 TFEU

• full effectiveness of Article 101 TFEU would be put at risk if it were not open to any individual to claim damages for loss caused to him by anticompetitive behaviour

• Any person is entitled to claim compensation for the harm suffered where there is a causal relationship between that harm and an agreement or practice prohibited under Article 101 TFEU


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Skanska

CJEU: the determination of the entity which is required to provide compensation for damage caused by an infringement of Article 101 TFEU is directly governed by EU law.

Because “undertakings” are liable for breach of art 101 , then “undertakings” are liable for compensation of damages resulting therefrom.

Undertaking is any entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed.

Undertaking is an autonomous concept of EU law which cannot have a different scope in public and private enforcement of EU competition rules.

Economic unit and economic continuity theories developed under art 101TFEU apply in private enforcement as well.


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C-882/19 - Sumal, AG Opinion of 15/04/2021,ECLI:EU:C:2021:293.

• Sumal sued for damages Mercedes Benz Spain, a subsidiary of Daimler, liable to have infringed art 101 TFEU in the EC decision in the “Truck cartel”

Request for preliminary ruling by a Spanish appellate court on the damages liability of a subsidiary for the infringement of article 101 by the parent.

Legal issue: reverse, top-down applicability of the “single economic unit” theory developed under art 101 TFEU in private antitrust litigation v. national “legal separation theory.”

Differing national opinions on the issue: Germany rejected such liability, however issue unresolved in light of a recent Dortmund court case. Netherlands extended liability to subsidiary. Spain conflicting decisions


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Sumal: bottom-up liability

“single economic unit” theory: functional approach-parent companies are liable for their subsidiaries’ anticompetitive conduct and are jointly and severally liable for the payment of the fine if they exercise decisive influence on the behaviour of its subsidiary on the market.

Presumption of decisive influence on the behaviourof its subsidiary when it holds, directly or indirectly,all or almost all of the capital of its subsidiary.


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Sumal

• Principle of personal liability- it is the undertaking as a whole that infringed competition law, once its boundaries are established, any legal person may be sued for damages

• Compliance with article 16 (1) Regulation 1/2003• Discretion of the Commission to select a legal person among

those who constitute the undertaking to which the peliminary notice will be sent and fine imposed

• This choice does not imply a determination of non responsibility of legal persons that have not been sanctioned but are part of the infringing economic unit

• National court may find the liability for damages of a legal person not covered by the commission decision provided that criteria for joint and severl liability applies


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Sumal: top-down liability-conditionsAs there is no reverse decisive influence, the subsidiary can be held liable for damages caused by the parent company if:

• In the light of the economic, organizational and legal links between these companies, they formed, at the time in which the violation was committed, an economic unit and,

• that the conduct of the subsidiary on the marketcontributed substantially to the achievement of theanticompetitive objective pursued with such conductand to the materialization of the effects of theinfringement.


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Questions

1. Quasi- follow on caseEven though it is a follow on case, the parties still need to prove the conduct of the subsidiary was necessary for the materialisation of the anticompetitive behaviour

2.extension of liability to sister companies?


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C-435/18, Otis GmbH, ECLI:EU:C:2019:1069. • Action for damages by the Land Oberösterreich

(Province of Upper Austria) against five companies involved of the “lift and escalator cartel”

• Damage: higher amount of subsidies granted as promotional loans for the purpose of financing construction projects affected by the cartel than would have been the case in the absence of the cartel.

• Supreme court: The loss suffered by the Province of Upper Austria does not present a sufficient connection with the purpose of the prohibition of cartel agreements, which is to maintain competition on the market affected by the cartel at issue.


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Otis:

• CJEU recalled the horizontal direct effect of arts 101(1) and 102 TFEU

• full effectiveness of Article 101 TFEU would be put at risk if it were not open to any individual to claim damages for loss caused to him by anticompetitive behaviour

• Any person is entitled to claim compensation for the harm suffered where there is a causal relationship between that harm and an agreement or practice prohibited under Article 101 TFEU


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OTIS

• CJEU applied the principle of full effectiveness of art 101 TFEU and effective protection against the adverse effects of an infringement of competition law

• persons not acting as suppliers or customers on the market affected by the cartel must be able to request compensation for loss resulting from the cartel

• referring court must determine whether, the Province of Upper Austria actually suffered such loss, by verifying, in particular, whether that authority had the possibility of making more profitable investments and, if that is the case, whether that authority adduces the evidence necessary of the existence of a causal connection between that loss and the cartel at issue.


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Question

• Problems of causation, just as in Kone, remain unsolved at the EU level


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C-547/16 GasorbaProbative value of the EU Commission

commitment decision

Facts:

• in 1993 Ms Rico Gil and Mr Ferrándiz González concluded 2 agreemets with Repsol : • Usufruct agreement and a long term lease agreement

(exclusivity) – transfered to Gasorba SL

• The Commission initiated a proceeding under Article 101 TFEU against Repsol due to potential significant foreclosure effects of the Spanish retail fuel market

• Commitment decision


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• Following the adoption of that decision, Gasorba and Others brought an action against Repsol, before the Madrid Commercial Court for:

• annulment of the lease agreement on the ground that it was contrary to Article 101 TFEU and,

• compensation for the harm arising from the application of that agreement.

• 1st inst. court = dismissed

• 2nd inst court = dismissed

• Supreme Court= preliminary questions to the CJEU on the probative value of the Commission’s commitment decision


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Gasorba

• system of parallel powers; national courts cannot take decisions running counter to the decision adopted by the Commission

• Commitment decision does not contain a decision on the infringement of art 101.

• Thus commitments decision does not preclude national courts from examining whether those agreements comply with the competition rules and, if necessary, declaring those agreements void pursuant to Article 101(2) TFEU

• principle of sincere cooperation laid down in Article 4(3) TEU and the objective of applying EU competition law effectively and uniformly require the national court to take into account the preliminary assessment carried out by the Commission and regard it as an indication, if not prima facie evidence, of the anticompetitive nature of the agreement at issue in the light of Article 101(1) TFEU.

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Cogeco

• Damages claim arising out the abuse of dominant position initiated in 2015.

• Problem claim time barred under national law

• transposed Directive 2014/104 into Portuguese law, provides that the substantive provisions of that law, including those relating to the burden of proof, are not retroactively applicable and the procedural provisions thereof are not applicable to actions brought before its entry into force. (5 June 2018)

• Is the Directive applicable?


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COGECO

• Article 22 of that directive provides:

• ‘1. Member States shall ensure that the national measures adopted pursuant to Article 21 in order to comply with substantive provisions of this Directive do not apply retroactively.

• 2. Member States shall ensure that any national measures adopted pursuant to Article 21, other than those referred to in paragraph 1, do not apply to actions for damages of which a national court was [seised] prior to 26 December 2014.’


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Cogeco

CJEU: Directive not applicable

Procedural rules of national law applicable to the case regarding limitation periods and rules suspension and interruption would undermine the principle of effectiveness of EU competition law. Indeed, they made it nearly impossible for victims to bring an action for damages based on the final decision of the competition authority.


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With financial support from the Justice

Programme of the European Union

Thank you!

Documents

5 May 2021 European Court of Justice Case Law on the