ECJ: Liability for damages of customers of competitors not involved in a cartel

I. Regulatory proceedings regarding the elevators and escalators cartel

In 2007 the European Commission (“Commission”) imposed fines of EUR 992 Mio. on several companies for their involvement in the escalators cartel which concerned the installation and maintenance of elevators and escalators in Belgium, Germany, Luxembourg and the Netherlands. In addition, the Austrian cartel court imposed fines of EUR 75.4 for the same companies involved in the cartel regarding the same product but for the Austrian territory in 2008.

II. Compensation claim of ÖBB based on damages

One of the victims, ÖBB-Infrastruktur AG (“ÖBB”) claimed for compensation from the members of the cartel for the amount of almost EUR 1.9 Mio despite the fact that ÖBB never bought their elevators and escalators from a cartel member, but only from other competitors, who were not involved in the cartel. ÖBB claimed that the prices set by their usual suppliers were too high due to the distorted market situation resulting from the effects of the cartel.

However, under Austrian law such compensation would not have been possible since the damage claimed by ÖBB, meaning the higher prices paid, was decided legitimately by its supplier through setting its prices by itself as a result of parallel market conduct and not as part of the conspiracy. Thus, the Supreme Court of Austria (“OGH”) sent a preliminary request to the European Court of Justice (“ECJ”) asking if the members of the cartel should be liable to compensate such damages.

III. “Umbrella-effect”

The ECJ ruled on 5 June 2014 in its Case C-557/12 Kone AG and Others v ÖBB-Infrastruktur AG that victims of the so-called “umbrella pricing effect” are entitled for compensation from cartel members. In other words, customers who ended up paying artificial high prices for a certain product may enforce compensation claims against those responsible. It pointed out, that the market price is one of the main factors considered when determining sales prices and strategies. It is therefore to consider, that competitors not involved in the cartel will increase prices according to the market situation. However, if the market situation is distorted by a cartel, ultimately the non-infringing competitor will also set prices at a level which it would not have set under normal competitive conditions.

IV. Causal link sufficient for compensation claim

Furthermore the ECJ stated that the effectiveness of European competition law may be affected, if national regulation would limit the possibility of filing cartel damage claims only to those who suffered from a direct contractual link. A causal relationship between the claimed damage and the antitrust infringement should suffice this legal requirement. Thus, victims of the umbrella pricing effect may be compensated by cartel members even if no direct contractual relation was ever established.

V. Conclusion

Based on this landmark decision of the ECJ, national rules regarding damage actions emerging from antitrust infringements must not be interpreted less favourable as other remedies that concern only national law, in order to comply with the principle of equivalence and to maintain the effectiveness of European competition law.

Authors:

Dr. Christina Hummer
Ori Kahn