On 16 December 2015, Christmas came early for thirteen airlines when the European General Court annulled (“reversed” in U.S. terminology) the European Commission’s (the “Commission”) November 2010 Air Freight decision, in which they were fined a total of EUR 799 million (the “Decision”).1 The General Court ruled that the Decision was vitiated by contradictions between the stated grounds for the Decision and its ‘operative part’ (“findings” in U.S. terminology).

 

This Article considers the impact of the General Court’s Air Freight ruling on the follow-on damages actions that have been filed across Europe against a number of the original addressees (“defendants” in U.S. terminology) of the Decision (and other airlines), together with the possible next step for the beleaguered Commission. The General Court’s decision is particularly important because, as summarized below, member state courts are bound by both the operative part of a Commission decision and its grounds.

It is well established in the European courts that the operative part of a Commission infringement decision must clearly indicate the nature and extent of the infringements penalized by the Commission.2 The fact of an inconsistency between the grounds and the operative part of a Commission decision, however, is not alone sufficient to vitiate the decision, provided that: (1) the wording of the operative part is sufficiently clear and precise to enable the addressee to ascertain the exact scope of the decision; and (2) the evidence relied upon to demonstrate the addressee’s participation in the applicable infringement is clearly identified and examined in the grounds.3

The General Court’s Air Freight Decision.

In its December 2015 Air Freight decision, the General Court concluded that there were two possible interpretations of the operative part of the Commission’s November 2010 Decision: that there either was a single and continuous infringement or four separate infringements involving various routes. Moreover, the General Court declared that the stated grounds were not consistent with either interpretation, and the grounds of the Decision even were inconsistent in themselves.

In the course of its opinion, the General Court underscored the nexus between an addressee’s grounds for contesting a Commission Decision and the correlation between the grounds and operative part of the Decision: a decision must enable the addressees to assess the scope and the nature of the liability and penalty imposed.4 According to the General Court, it is the purpose of the statement of reasons “to provide the person concerned with sufficient information to ascertain whether the decision is well founded or whether it is vitiated by a defect which may permit its legality to be contested and to enable the General Court to review the legality of the decision.”5 The General Court could not assess whether the evidence adduced by the Commission in its Air Freight Decision in relation to a single and continuous infringement was sufficient to establish the existence of four infringements – which corresponds to the other possible interpretation of the operative part.

Next Step for the Commission.

When a Commission infringement decision is overturned by the General Court, the Commission can appeal to the Court of Justice of the European Union. However, in this instance, the Commission’s deadline to appeal has passed, and it has not filed an appeal. Although it is widely presumed that the Commission will re-adopt an amended infringement decision as soon as it is able to do so, as yet the Commission has made no public statement regarding its intentions.

The length of time taken for re-adoption by the Commission will likely depend upon the point at which the irregularities identified by the General Court arose: during the Commission’s investigative or decision making process. If the annulment does not concern irregularities in any measures taken prior to the announcement of the Decision, the Commission can adopt a new infringement decision without an additional hearing, provided there are not any new objections by the addressees.6

How the General Court's Air Freight Decision May Affect Follow-On Damages Suits.

Article 16 of the Commission’s Regulation No. 1/2003 provides: “When national courts rule on agreements, decisions or practices under [European competition law] which are already the subject of a Commission decision, they cannot make decisions running counter to the decision adopted by the Commission.” Thus, Commission decisions are binding on the courts of the EU Member States.

The binding effect of the Commission’s decision has been seen by many as a major advantage in the context of claims for damages resulting from antitrust infringements as (in so far as their claim does not extend beyond the parameters of the Commission’s decision) claimants do not have to establish the fact of the breach or the liability of the defendants before the national court. An addressee cannot challenge before a national court a finding by the Commission that that an addressee committed an antitrust infringement.

However, the exact scope of the binding effect has been – and still is – the subject of major debate in legal doctrine. In particular, while some argue that only the operative part of the European Commission decisions is binding, others consider the entire decision, including its grounds, to be binding. The different views can have significant ramifications in practice. For example, findings by the Commission on the extent of the cartel overcharge would, of course, be very helpful to claimants.

The Air Freight decision has positive implications for follow-on damages claims, because it allows the conclusion that the grounds of the decision have binding effect, too – at least to the extent to which the operative part is based on the grounds.

Conclusions

The Air Freight case is a ‘high flyer’ in many respects; from the number of participants and the geographic spread of its implementation, to the length of time it has taken at each stage of the judicial process thus far. Antitrust damages claimants are often warned that the wheels of justice turn slowly, but the timeframe in the claims filed to date against the airlines in Europe must surely be viewed as truly exceptional. With settlements in the US airfreight class action already well in excess of EUR 1 billion, it is to be hoped that the Commission will be swift to readopt a revised infringement decision, and that the European private claimants can finally receive the compensation due to them.